Payment System Annual Report 2004 : "Crucial : Developing a Safe and Reliable Payment System" - Bank Sentral Republik Indonesia
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September 22, 2019

In the era of an almost unlimited modern economy, Bank Indonesia and other central banks in many other countries are paying close attention to development of the payment system, both cash and non-cash. Such close awareness stems from several reasons, including among others that the scope of the payment system is expanding in terms of operational services, oversight and development.

“Bank Indonesia realizes that there is the potential of systemic risk in the payment system, which can exacerbate reputation risk and therefore, have a high social cost” acknowledged Bank Indonesia Deputy Governor R Maulana Ibrahim, when introducing the Payment System Annual Report for 2004. “For that reason” he added “the payment system function is critical”.

It is crucial, therefore, to develop a secure and efficient payment system, which is proven to support other key central bank functions, namely financial system stability and monetary policy effectiveness. However, looking at the characteristics of the payment system, which are dominated by operational aspects, these functions of the central bank should be seen as routine and not burdened by unsure, politically driven policy.

“This fact” added Maulana “tends to leave the actualization and formulation of policy for the payment system neglected, even by the administrator.” For example, several cash payment policies are now obsolete and require adjusting to prevailing conditions. Therefore, the payment system is critical in maintaining fund transfers in the economy. “It would be unimaginable for the cycle to stop for just one day or even a moment.  This would have an enormous effect on financial system stability” he underlined. (***)

 

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