Malaysia targets broader local currency use through BRICS
The Ministry of Finance says the effort aims to reduce currency risks and transaction costs while giving businesses more payment options.
Malaysia intends to encourage more trade and investment payments in local currencies through cooperation within BRICS, the Ministry of Finance (MOF) told the Dewan Rakyat. The intended benefits include lower transaction costs, reduced foreign exchange risks and stronger financial resilience to external shocks.
The ministry outlined the approach in its reply to Tan Sri Abdul Hadi Awang (PN-Marang), who asked about Malaysia's pursuit of international financial system reforms through BRICS. MOF said wider currency choices would give businesses more options when making international transactions.
Among initiatives already implemented, Malaysia has cooperated with China on facilitating bilateral trade payments in renminbi and ringgit. It has also implemented the Local Currency Transaction Framework with Indonesia and Thailand.
According to MOF, greater use of regional currencies, including those of BRICS members, could boost liquidity, make foreign exchange exposure easier to manage and help regional foreign exchange markets develop. Malaysia would further improve the channels and mechanisms that support local currency transactions, it said.
MOF nevertheless said structural factors continued to drive major-currency use in international finance and trade. These included financial market size and broad acceptance among investors and businesses. The ministry said any expansion in local currency use must be led by market demand, backed by efficient infrastructure for payments across borders and ongoing cooperation among countries.
