Indonesia
Indonesia[IDR]
...
Institutional setup of monetary policy decisions and operations
| Policy decision body, size and composition | Board of Governors, consists of Governors, Senior Deputy Governors and 4 to 7 Deputy Governors |
|---|---|
| Major mandates 1 | Bank Indonesia is mandated with creating and maintaining rupiah stability. That mandate is explicitly stipulated in Act No. 23 of 1999 concerning Bank Indonesia, as amended by Act No. 3 of 2004 and Act No. 6 of 2009 in Article 7. Rupiah stability encompasses two dimensions. First, rupiah stability is the price stability of goods and services, as reflected by inflation. The second dimension relates to rupiah exchange rate stability against other currencies. Indonesia implements a free-floating exchange rate regime and exchange rate stability is necessary to achieve and maintain price and financial system stability. |
| Decision-making process | The policymaking and decision-making processes at Bank Indonesia follow structured and systematic procedures and mechanisms to increase policy credibility, create a system of checks and balances as well as ensure risk mitigation (rulemaking rules). |
| Frequency / length of meetings | The Board of Governors holds weekly and monthly meetings. The monthly Board of Governors meeting is convened at least once per month and, since 2016, has been held over two consecutive days in order to improve decision-making quality. On the first day of the monthly Board of Governors meeting, the results of economic assessments as well as the outlook for monetary policy, financial system stability, the payment system and rupiah currency management are presented, discussed and integrated with the various policy mix options. On the second day, the recommendations are discussed, while the monetary and macroprudential policies are determined along with payment system and rupiah currency management policies. The weekly Board of Governors meeting is held at least once per week to evaluate monetary policy implementation, financial system stability developments, payment system and rupiah currency management developments as well as to determine other principal and strategic policies in relation to task implementation at Bank Indonesia. |
| Frequency of announcements | The Board of Governors holds weekly and monthly meetings. The monthly Board of Governors meeting is convened at least once per month and, since 2016, has been held over two consecutive days in order to improve decision-making quality. On the first day of the monthly Board of Governors meeting, the results of economic assessments as well as the outlook for monetary policy, financial system stability, the payment system and rupiah currency management are presented, discussed and integrated with the various policy mix options. On the second day, the recommendations are discussed, while the monetary and macroprudential policies are determined along with payment system and rupiah currency management policies, others policies including communication strategy. The weekly Board of Governors meeting is held at least once per week to evaluate monetary policy implementation, financial system stability developments, payment system and rupiah currency management developments as well as to determine other principal and strategic policies in relation to task implementation at Bank Indonesia. |
| Main policy target | Rupiah stability which encompassed in two dimensions, namely in Inflation and Exchange Rate. Inflation target for 2022: 3±1%. Exchange rate: No target rate, but maintaining stability. |
Overview of key features
| Key policy rate | BI 7-Day Reverse Repo Rate |
|---|---|
| maturity (days) | 7 |
| Operating target | Unsecured overnight interbank market rate |
| maturity (days) | 1 |
| Standing facilities | Lending, deposit |
| Corridor width (bp) | 150 |
| Reserve requirements | Yes |
| maintenance period | 2 weeks |
| Main operation 2 | RRP |
| functions | liquidity management |
| maturity (days) | 1 week – 12 months |
| regular interval | Yes |
| frequency | Daily (1 week) 3 |
| Overall frequency | Daily |
| Discretion left to operational desk | maturity, amounts, and timing |
| Key policy signals via | |
| announcement | √ |
| keynote tender | |
| standing facility | |
| other | √ |
Monetary policy communication
| Explicit use of forward guidance | Y |
|---|---|
| Timing / media of policy announcement | Yes. 14:00 pm on the day second day of board meeting via press conference and live streaming on central bank website via youtube, social media and press release |
| Policy announcement and documents | Policy rate / BI-7DRR |
| Explaining policy decisions | Detailed press release/media statement and Q&A |
| Dissemination of minutes (timing / media) | No. However, BI publish monthly Monetary Policy Review ( monthly, 2 days after board meeting) and Monetary Policy Report (quarterly, 5 days after board meeting ) |
| Content of minutes | N |
| Publication of forecasts 4 | Yes, quarterly basis on Monetary Policy Report |
| Publication of projected path of policy rate 5 | N |
Reserve requirements: ratios and size
| Main functions served | Liquidity management |
|---|---|
| Domestic currency | 9% (conventional) 7.5% (sharia) 6 |
| Foreign currency | 4% (conventional, with 2% in daily and 2% in average forms) 1% (sharia) |
| Average | - |
| Required reserves | IDR511.11 trn 7 |
| Required reserve as % of GDP | 3.01% 8 |
| Actual reserves | IDR537.08 trn 9 |
| Actual reserve as % of GDP | 3.16% 10 |
Main features of reserve requirements
| Averaging | Y 11 |
|---|---|
| Carry-over | N |
| Type | Lagged |
| Maintenance period | 2 weeks |
| end (day) | 15th and end of month |
| Calculation period | 2 weeks |
| end (day) | 15th and end of month |
| Lag before maintenance | 2 weeks |
| Vault cash | N |
| restrictions | |
| Remuneration | Y 12 |
| average rate | |
| marginal rate | |
| Framework last changed | 09/22 |
Liquidity position and forecasting
| Structural Position | Surplus |
|---|---|
| Most volatile factor(s) | utilisation of Rupiah reserve, Government transaction flows and currency flows |
| Most unpredictable factor(s) | utilisation of Rupiah reserve |
| Forecast horizon(s) | 1 year |
| Frequency | Daily |
| Frequency of revision | Daily (2x) |
| Forecast published? | Yes, daily |
Standing facilities: lending / market ceiling
| Name | (i) Lending Facility (ii) Financing Facility (Sharia) |
|---|---|
| Form | (i) Repo (ii) Other contract in sharia principle |
| Pricing method | Policy Rate + 75bps |
| Maturity | O/N |
| Access limited by/to | Collateral; banks registered as participants in monetary operations |
| Function(s) | Establish ceiling of O/N rate corridor |
Standing facilities: deposit / market floor
| Name | Deposit Facility 13 |
|---|---|
| Form | Deposit |
| Pricing method | Policy Rate - 75bps |
| Maturity | O/N |
| Access limited by/to | Banks registered as participants in monetary operations |
| Function(s) | Establish floor of O/N rate corridor |
Open market operations: repo or reverse repo
| Name/Type 14 | (i) RRP (ii) RP 15 |
|---|---|
| Maturity | (i) 1 week to 12 months (ii) 1 week to 12 months |
| Frequency | (i) RRP: daily (1 week) (ii) RP: daily (1 week) 16 |
| Pricing method | Auction |
| Access limited by/to | Banks registered as participants in monetary operations |
| Function(s) | (i) RRP: Liquidity absorption (ii) RP: Liquidity injection |
Open market operations: central bank bills
| Name | (i) SBI (BI Certificate) (ii) SDBI (BI Certificate of Deposit) (iii) SBIS (Sharia BI Certificate) (iv) SukBI (BI Sukuk) |
|---|---|
| Total issuance | (i, ii, iii) Nill (iv) Rp53,70 trillion 17 |
| Maturity | (i, ii, iii) - (iv) 1 week - 12 months |
| Restrictions on possible maturities | (i, ii, iii, iv) Up to 12 months |
| Pricing method | Auction |
| Access limited by/to | Banks registered as participants in monetary operations |
| Discretion left to operational desk | Maturity, size, timing |
Open market operations: FX swaps
| Maturity | 1, 3, 6, 12 months |
|---|---|
| Frequency | Every Business Day 18 |
| Pricing method | Auction |
| Access limited by/to | Banks registered as participants in monetary operations |
| Function(s) | Liquidity management |
Other significant liquidity management means
| Name/Type 19 | (i) Term Deposit (ii) Term Repo (iii) OT (purchase and sales) |
|---|---|
| Form | (i) Term Deposit (ii) Term Repo (iii) OT (purchase and sales) |
| Frequency | (i & ii) As needed |
| Maturity | (i) 2 - 6 days (ii) 1 week, 2 week, 1 month, 3 month (iii) - 20 |
| Pricing Method | (i) Auction/Non Auction (ii) Auction/Non Auction (iii) Auction/Non Auction |
| Access limited by/to | (i, ii, & iii) Banks registered as participants in monetary operations |
| Function(s) | (i & ii) Liquidity management (iii) Liquidity management, FX intervention through purchases/sales of gov't bond |
Settlement systems and intra-day liquidity facilities
| Settlement system | RTGS, since 2000 |
|---|---|
| Intra-day liquidity facility | Intra-day repo |
| Charge | No charge 21 |
| Foreign currency settlement system | Link to Hong Kong’s USD CHATS system |
| CLS participation by banks | No |
| Other settlement system(s) | Yes 22 |
Collateral
| Standing facilities: List of eligible collateral | Domestic currency denominated securities: 1. Securities issued by BI (SDBI, SBI, SBIS, SukBI) 2. Securities issued by Government of Indonesia |
|---|---|
| Standing facilities: Discretion of central bank on collateral 23 | Yes |
| Open market operations: List of eligible collateral | Domestic currency denominated securities: 1. Securities issued by BI (SDBI, SBI, SBIS, SukBI) 2. Securities issued by Government of Indonesia Foreign currency denominated securities: 1. Securities issued by other countries (sovereign) which the central bank has agreement with BI |
| Open market operations: Discretion of central bank on collateral 24 | Yes |
Dissemination of operational information: liquidity forecast
| Forecast published? | Yes |
|---|---|
| Channel(s) | (i) BI website (ii) LBUT (BI Antasena) (iii) Bloomberg 25 |
| Timing | (i & ii) 08:30 & 14:00 (iii) 08:30 |
| Remarks | Forecast for current day only |
Dissemination of operational information: open market operations
| Volume and price published? | Yes |
|---|---|
| Channel(s) | BI website, LBUT (BI Antasena), BI-ETP, Bloomberg, Reuters 26 |
| Timing | Daily |
Dissemination of operational information: standing facilities
| Lending facility usage: Channel(s) | BI Website |
|---|---|
| Lending facility usage: Timing | Daily |
| Deposit facility usage: Channel(s) | BI Website |
| Deposit facility usage: Timing | Daily |
Other information dissemination
| Type | A. Policy or Instituitonal Reports: - Indonesia Economic Report - Monetary Policy Report - Monetary Policy Review - Nusantara Report - Quarterly Report to Parliament - Bank Indoneia Annual Report B Thematic Publication: - Press Release - BoG Statement - Survey & Statistics - Speech - Researh Dissemination - Advertorial |
|---|---|
| Channel(s) | A. Conventional: - Mass media -Formal & informal meeting -BI – CSR & Internal Publication B. Digital - Social Media - BI Website - Online Media C. Others -Key Opinion Leader - Opinion Maker & Edoser |
| Timing | Monthly, Quarterly, BIAnnual, Annualy, as needed |
1 Describe as well the legal status of the mandate and involvement of government
2 RP = reversed purchase (repo, inject liquidity), RS=RRP=reversed sale (reverse repo, absorb liquidity), RT=reversed transaction (repo or reverse repo).
3 current: 2 week - 1 month: 3x/week; 3 month: 1x/week; 6-12 month: 1x/month
4 For instance, economic and inflation forecasts related to policy decision.
5 If applicable, describe the publication of any fan-charts or uncertainty bands around the forecasts/projections.
6 As of 1st September, reserve requirements ratio in domestic currency increased to 9% (conventional) and 7.5% (sharia).
7 With reserves in domestic currency as of 30 September 2022 and 2021 GDP.
8 With reserves in domestic currency as of 30 June 2022 and 2021 GDP.
9 With reserves in domestic currency as of 30 June 2022 and 2021 GDP.
10 With reserves in domestic currency as of 30 June 2022 and 2021 GDP.
11 The fulfilment of required reserves is in daily and average forms.
12 Effective on 1st August 2020 for banks which are meeting the daily and average rupiah reserve requirements. Remunerations are given 1.5% (per year) on certain part of required reserve.
As of 1st June 2022, particular part of required reserve that gets remunerations are 5% (conventional) or 3.5% (sharia).
As of 1st July 2022, particular part of required reserve that gets remunerations are 6.5% (conventional) or 5% (sharia).
This particular part of required reserve that gets remuneration will increase to 7% (conventional) or 5.5% (sharia) on 1st September 2022.
13 including deposit facility sharia in the form of other contract in sharia principle
14 RP=Reversed purchase (“repo”), RS=RRP=Reversed Sales (“reverse repo”), RT=Reversed transaction (RP or RRP).
15 (i) and (ii) including other contract in sharia principle
16 (i) current: 2 week - 3 month: daily; 6-12 month: 1x/week
(ii) current: 2 week - 1 month: 3x/week; 3 month: 1x/week; 6-12 month: 1x/month
17 (i) SBI last auctioned on Sep 13th, 2019; (ii) SDBI last auctioned on July 2nd, 2018; (iii) SBIS last auctioned on Mar 5, 2021; (iv) outstanding as of Nov 18, 2022
18 current: 3x per week
19 OT = Outright Transaction, DB = Direct Borrowing, DL = Direct Lending.
20 (i) possible maturity up to 12 months
21 Effective since 1 November 2018.
22 BI-SSSS is a transaction facilities with BI including its administration and electronic securities administration; SKN is an interbank clearing system for cheque payment, other debit notes and interbank credit transfer; C-BEST is settlement system for stocks, corporate bonds, etc. (others than government and central bank securities).
23 Discretion of the central bank to expand collateral types, and list of additional collateral types that the central bank can take on a discretionary basis. Also, additional information such as delays required if discretionary collateral changes.
24 Discretion of the central bank to expand collateral types, and list of additional collateral types that the central bank can take on a discretionary basis. Also, additional information such as delays required if discretionary collateral changes.
25 LBUT: Integrated Commercial Bank Reporting system
26 LBUT: Integrated Commercial Bank Reporting system
BI-ETP: Bank Indonesia Electronic Trading Platform