No. 26/62/DKom
Financial system stability in 2023 was maintained. Against a backdrop of persistent global economic shocks and uncertainty, solid domestic economic growth was maintained throughout 2023. Such conditions were reflected by sustained financial system resilience, with the Financial System Stability Index (FSSI) remaining in the normal zone throughout 2023. Similarly, intermediation tracked an upward trend as risk appetite in the banking industry was maintained, coupled with ample liquidity. Moving forward, Bank Indonesia is confident that financial system stability will be maintained, bolstered by KSSK policy synergy and innovation as well as the Bank Indonesia policy mix, accompanied by an accommodative macroprudential policy stance. That was the key takeaway of the 42nd Financial Stability Review (FSR), March 2024 edition, entitled Reviving Intermediation amid Global Uncertainty launched today (27/03/24) in Jakarta.
BI Deputy Governor, Juda Agung, took the opportunity to affirm that despite global economic uncertainty, Bank Indonesia remains focused on efforts to preserve macroeconomic and financial system stability by maintaining national economic growth momentum. Deputy Governor Juda emphasised three aspects as the focus of macroprudential policy. First, fostering balanced and quality credit growth by strengthening Macroprudential Liquidity Policy Incentives (KLM) and optimising existing liquidity incentives. Second, in the context of cyber security, BI is currently finalising its end-to-end cyber resilience and security policy (KKS), from governance, preventative and handling measures, including the coordination mechanism between the authorities and industry, to monitoring and supervision. Third, an inclusive and green economy and finance. In this pillar, the KLM incentives and Macroprudential Inclusive Financing Ratio (RPIM), along with LTV policy for green housing loans and downpayment requirements on green automotive loans will remain oriented towards reviving new loan disbursements from the banking industry to inclusive and green sectors, thereby maintaining an optimal balance between commercial motives and the sustainability of bank financing.
The FSR publication was launched with three goals. First, as an early warning system of the financial system stability risks faced, thereby anticipating the risks before escalating into a crisis. Second, building market confidence in the financial system by monitoring the risks and measures taken by the authorities to mitigate and prevent the risks. Third, as a form of transparency as the macroprudential authority, Bank Indonesia in collaboration with other authorities, including the Financial Services Authority (OJK), Ministry of Finance and Indonesia Deposit Insurance Corporation (IDIC), is accountable for maintaining financial system stability.
The launch of FSR No. 42 was arranged to coincide with a seminar entitled Reviving Intermediation amid Global Uncertainty. Resource persons from Bank Indonesia, the ASEAN+3 Macroeconomic Research Office (AMRO) and Association of State-Owned Banks (HIMBARA) attended the seminar as speakers. Several issues were discussed, including a number of risks and challenges to ASEAN member countries, particularly Indonesia, followed by risk mitigation strategies, as well as bank strategies to maintain the intermediation function by collecting funds and extending loans.
FSR No. 42 is available for download in digital format via the Bank Indonesia website. The Financial Stability Review is one of Bank Indonesia's flagship publications concerning financial system stability, released each semester and containing macro-financial assessments of the financial system in the reporting period, an assessment of financial system stability in Indonesia, the policy response of Bank Indonesia, as well as projected financial system conditions and the policy direction. In terms of transparency, Bank Indonesia publishes the FSR in accordance with Article 58 of the Bank Indonesia Act (No. 23) of 1999, as amended several times, most recently by Act No. 4 2023 concerning Financial Sector Development and Strengthening (PPSK Act).
Jakarta, 27th March 2024
Communication Department
Erwin Haryono
Assistant Governor
