The Bank of Korea (BOK) has signed a memorandum of understanding (MOU) with Bank Indonesia to enhance cross-border payments.
The MOU builds on the 2022 bilateral central bank cooperation agreement, which aims to improve cross-border payment interoperability. The agreement seeks to establish a framework to facilitate connectivity between the two countries.
The implementation of the MOU aims to support cross-border trade and promote digital economy and finance in Indonesia and South Korea, and is also expected to benefit the tourism sector given the high travel volume between the two countries.
The agreement is expected to enable more affordable, faster, inclusive and transparent cross-border payments between Indonesia and South Korea.
Partnership Background
The tourism sector, in particular, stands to benefit greatly from the agreement. Indonesia and South Korea have long been popular destinations for travelers from each other’s countries, with hundreds of thousands of tourists traveling between the two countries annually. Improved cross-border payment systems will facilitate easier and safer financial transactions for tourists, enhancing the overall travel experience. This includes facilitating the booking process for accommodation, dining, shopping, and other tourism-related activities, potentially increasing tourist satisfaction and tourism revenues for both countries. Additionally, businesses in the tourism sector, such as hotels, travel agencies, and retailers, are likely to see growth as more efficient payment systems lead to increased spending.
In the context of the digital economy, both Indonesia and South Korea have made great strides in promoting digital finance and financial technology. Indonesia, with its burgeoning fintech sector, is looking to expand financial inclusion and modernize its banking infrastructure. South Korea, known for its advanced technological environment, continues to innovate in digital payment solutions and blockchain technology. The MOU is in line with these national efforts by supporting the development of an integrated and efficient payment infrastructure leveraging digital technologies. The agreement is expected to foster greater financial cooperation and innovation, contributing not only to consumers and businesses, but also to the overall economic growth and digital transformation agenda of both countries. By setting a precedent for future collaboration, the initiative highlights the importance of cross-border digital finance in an increasingly interconnected global economy.
