SINGAPORE - The central banks of Singapore and Indonesia have signed a memorandum of understanding (MOU) to strengthen bilateral cooperation and deepen ties in areas such as innovation and financial regulation.

In a joint statement on Friday (Jan 21), the Monetary Authority of Singapore (MAS) and Bank Indonesia said that the agreement reflects the two countries' joint interest to promote collaboration in relation to payments innovation and formalise cooperation across an expanded range of central bank and regulatory functions.

These functions include monetary policy, financial stability, regulatory and supervisory frameworks, as well as anti-money laundering and countering the financing of terrorism (AML-CFT).

MAS managing director Ravi Menon said that the MOU underscores the commitment of both parties to strengthen their longstanding relationship and further collaboration in common areas of interest, such as financial innovation and payments connectivity.

Mr Perry Warjiyo, governor of Bank Indonesia, noted that the MOU gives both central banks the opportunity to enhance collaboration and address growing complex challenges in key areas of central banking, including payment innovation and AML-CFT.

The two central banks will work together through policy dialogues, exchange of information, technical cooperation, joint innovation and working-level committees, the statement said.

MAS and Bank Indonesia have a US$10 billion (S$13.46 billion) bilateral financing agreement that supports monetary and financial stability in both Singapore and Indonesia amid the ongoing recovery from the Covid-19 pandemic.

The agreement, which was endorsed by Indonesian President Joko Widodo and Singapore Prime Minister Lee Hsien Loong, was established in November 2018.

It was extended last November to Nov 4, 2022.