“This is not something that is new. We have been promoting (the use of local currency) because (it) gives businesses a wider range of options to do settlement and can reduce the cost of business,” she said during BNM’s release of the first quarter GDP results today.

Shamsiah highlighted that there have already been several initiatives since the Asian Financial Crisis to strengthen regional self-help mechanisms and foster regional financial stability.

These initiatives include the Chiang Mai Initiative Multilateralisation Agreement (CMIM) and the Asean+3 Macroeconomic Research Office (AMRO).

AMRO is a regional macroeconomic surveillance organisation that aims to promote macroeconomic and financial stability in the Asean+3 region, with the three extra countries being China, South Korea and Japan.

Meanwhile, the CMIM agreement, which came into effect in 2010, was a multilateral currency swap agreement to provide liquidity support between the ASEAN+3 nations. It has since been amended and enhanced from time to time.

The core objectives of the CMIM are to address balance-of-payment and short-term liquidity difficulties in the region, and supplement existing international financial arrangements.

The governor emphasised that BNM would continue to look at improving the efficiency and effectiveness of such agreements in order to serve the region well, and avoid a repeat of the Asian Financial Crisis.

“Asean, together with the plus three (countries) – China, Korea and Japan – have come together to see how best to continue to have an efficient arrangement regionally,” said Shamsiah.

“Malaysia is one of the pioneer countries in terms of promoting the use of local currency to settle trade and investment,” she added.

Malaysia has signed a local currency framework with both Thailand and Indonesia, and was amongst the first to sign a swap agreement with China to use yuan to settle trade and investment between the two nations.