Bank Indonesia Holds Countercyclical Capital Buffer (CCB) at 0% - Bank Sentral Republik Indonesia
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October 21, 2020

No. 18/39/DKom

Bank Indonesia decided to hold the countercyclical capital buffer (CCB) unchanged at 0% (zero percent) in accordance with Bank Indonesia Regulation (PBI) No. 17/22/PBI/2015 concerning the countercyclical capital buffer (CCB), dated 23rd December 2015.

The goal of the CCB is to prevent a build-up of systemic risk due to excessive credit growth, while simultaneously absorbing potential bank losses through the application of a buffer. Pursuant to the Bank Indonesia Regulation (PBI), Bank Indonesia performs a rigorous assessment regarding the magnitude and timing of the countercyclical capital buffer (CCB) at least once every six months. The evaluation utilises a combination of leading and supporting indicators, coupled with professional judgement based on Q1/2016 data.

The Credit-to-GDP gap, as the main CCB indicator, has not shown any signs of excessive credit growth that could prompt systemic risk. In fact, credit growth is currently not considered optimal, achieving 8.7% (yoy) in March 2016 with economic growth recorded below the projection at 4.92% (yoy) in Q1/2016. Furthermore, information taken from the supporting indicators confirmed the findings, with the Financial Cycle of Indonesia remaining in a contractionary phase and bank performance indicators also corroborating the leading indicator.

By holding the CCB at 0%, banks are expected to increase the intermediation function and, therefore, bolster economic growth.

Jakarta, 23rd May 2016
Communication Department

Tirta Segara
Executive Director

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