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The following is issued on behalf of the Hong Kong Monetary Authority:
The Hong Kong Monetary Authority (HKMA) and Bank Indonesia jointly announced today (January 25) that the new cross-border payment-versus-payment (PvP) link between Hong Kong's US Dollar real time gross settlement (RTGS) system and Indonesia's Rupiah RTGS system has been launched today.
The link, which starts operation today, will eliminate settlement risk in foreign exchange transactions between the US Dollars and Indonesian Rupiah by ensuring the simultaneous delivery of US Dollars in Hong Kong and Rupiah in Indonesia. Banks in Indonesia can better manage their counterparty risks arising from the foreign exchange transactions and enhance their operational efficiency in settling those transactions during Asian hours.
On October 24, 2008, the HKMA and Bank Indonesia signed a Memorandum of Understanding on the establishment of the PvP link. Following the completion of system development and testing, the link went live on schedule today.
The link is operated in Indonesia by Bank Indonesia and in Hong Kong by Hong Kong Interbank Clearing Limited, which operates the interbank clearing systems in Hong Kong, and is jointly and equally owned by the HKMA and the Hong Kong Association of Banks.
Mr Eddie Yue, Deputy Chief Executive of the HKMA, said, "The PvP link between the US Dollar RTGS system in Hong Kong and the Rupiah RTGS system in Indonesia makes settlement safer and more efficient by eliminating the settlement risk arising from the delivery of two currencies in different time zones. I am glad that Bank Indonesia and the HKMA share the same view in improving the infrastructure coordination among the two economies for promoting the monetary and financial stability."
Mr S. Budi Rochadi, Deputy Governor of Bank Indonesia, said, "The implementation of the USD/IDR PvP link between the Indonesian Rupiah RTGS system and the US Dollar RTGS system in Hong Kong can help mitigate settlement risk in USD/IDR inter-bank FX trades in Indonesia. The implementation also gives benefits to Indonesian banks by allowing immediate utilization of IDR and USD since both currencies are settled real-time, simultaneously and in Asian time zone and potentially making wider choice of counterparties in inter-bank USD/IDR market as the market players are not constrained by counterparty trading limit representing FX settlement risk exposure. In turn, this could promote safe, sound and efficient FX market in the country."
For further enquiries, please contact:
Hong Kong Monetary Authority
Hing-fung Wong, Manager (Communications), at 2878 1802 or
Yokee Wong, Manager (Communications), at 2878 1213
Bank Indonesia
Pipih D. Purusitawati, Senior Analyst, at (62) 21-3818772
Jultarda Hutagalung, Analyst, at (62) 21-3818769
Ends/Monday, January 25, 2010
Issued at HKT 17:42
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