Global Economic Recovery Demands Greater Cooperation - Bank Sentral Republik Indonesia
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April 06, 2020

No. 22/14/DKom

The recent emergence of various global pressures, including the coronavirus disease 2019 (Covid-19) outbreak, has compelled G20 countries to increase cooperation. To that end, Indonesia urges G20 member countries to strengthen international cooperation and implement a policy mix that reinforces the recovery and stimulates global economic growth. Furthermore, G20 members have agreed to strengthen the monitoring of global risks, originating from Covid-19 in particular, while simultaneously increasing vigilance of various potential risks and implementing an effective monetary, fiscal and structural policy mix response. Those were the key takeaways of the G20 Finance Ministers and Central Bank Governors Meeting held from 22-23 February 2020 in Riyadh, Saudi Arabia, with the Governor of Bank Indonesia, Perry Warjiyo, and the Minister of Finance, Sri Mulyani Indrawati, in attendance. Despite a moderate uptick projected in the global economic outlook, the potential risks remain high, including geopolitical tensions, trade disputes and policy uncertainty.

Assuming the G20 presidency for 2020, Saudi Arabia will steer the work of the G20 under the theme of “Realising Opportunities of the 21st Century for All” due to the rapid advancement of technology that has changed the global landscape towards digital economic and financial transformation. Nevertheless, public access and participation in the economy remains below par, especially amongst the youth, women and MSMEs. Consequently, efforts are required to broaden access and opportunities for underrepresented groups to participate in the economy and finance, in particular through the utilisation of technology. In addition, increasing access to funding sources through domestic capital market development as well as strong regulation and supervision of the financial sector in the era of the digital economy are also on the agenda of Saudi Arabia’s G20 Presidency. The Governor of Bank Indonesia expressed support for the G20 agenda, particularly in terms of domestic capital market development, underlining the importance of economic resilience as a foundation of domestic capital market development. In addition, the BI Governor also emphasised the importance of expanding the domestic investor base, mitigating capital flow volatility and maintaining capital market integrity to prevent fraud and maintain credibility.

Concerning the financial sector, the focus of G20 finance ministers and central bank governors is strengthening the financial system by implementing a financial sector reform agenda and exploiting the advancement of technology. To that end, the G20 welcomed the current plan of the Financial Stability Board (FSB), Committee on Payments and Market Infrastructures (CPMI) and other standard setting bodies (SSBs) in terms of formulating a roadmap to strengthen cross-border payments along with preparations for the transition from the London Interbank Offered Rate (LIBOR), which will be replaced in 2021. Furthermore, BI Governor Perry Warjiyo conveyed Indonesia’s support for the Saudi G20 presidency agenda, particularly in terms of cross-border payments and the LIBOR transition. Bank Indonesia itself has already launched Indonesia’s Payment System Vision for 2025, in which cross-border payments are an important element, including supporting FinTech participation and digital payment services to facilitate efficient, secure and affordable cross-border payments. Moreover, Bank Indonesia has cooperated with other relevant authorities to prepare the banking industry in Indonesia for the LIBOR transition, stressing the importance of international cooperation during the transition process. Under the presidency of Saudi Arabia, the G20 will formulate guidelines to increase financial inclusion digitally amongst the youth, women and MSMEs. In addition, discussions on other important issues affecting the financial sector are continuing, including the regulation/supervision of global stablecoins (GSCs), overcoming financial market fragmentation, enhancing cyber resilience and conducting an impact evaluation of reform agenda implementation in the financial sector, encompassing Too Big To Fail (TBTF).

A joint communiqué issued by the G20 finance ministers and central bank governors from the summit held on 22-23 February 2020 in Riyadh, Saudi Arabia can be downloaded using the following link.

Jakarta, 20th February 2020

Onny Widjanarko
Executive Director



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