India and Indonesia are all set to settle bilateral transactions in their local currencies and through real-time payment mechanisms, media has reported.
Indonesian Finance Minister Mulyani Indrawati told reporters as part of an India-Indonesia joint statement that the countries are "discussing possibilities of cooperation in critical technology, payment system under the central bank and using more local currency.”
"India’s Finance Minister Nirmala Sitharaman and her Indonesian counterpart discussed the proposals ahead of meetings among the Group of Twenty countries in India," Bloomberg reported, citing an anonymous official.
The proposal follows a similar one between India and the United Arab Emirates (UAE) over the weekend. On Saturday, the two countries' central bank chiefs signed two Memorandums of Understanding (MoU) to strengthen the use of local currencies for cross-border transactions and for interlinking their payment and messaging systems.
“The MoU on establishing a framework for the use of local currencies for transactions between India and the UAE aims to put in place a Local Currency Settlement System to promote the use of INR (Indian rupee) and AED (UAE Dirham) bilaterally,” the RBI said in a statement on July 15.
India has so far linked fast payment systems with Singapore, Oman, Nepal, Bhutan, Malaysia and other countries for cross-border transactions. Meanwhile, it is also in talks with Japan and other nations in order to switch to national currencies.
Delhi is making efforts to internationalize its currency and reduce its dependency on the US dollar. Since July last year, the Reserve Bank of India, the country's apex bank, allowed more than a dozen banks to settle trading operations in rupees.