Decision Making Process - Bank Sentral Republik Indonesia
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September 26, 2018

DECISION MAKING PROCESS

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Processes of policy formulation and decision making in Bank Indonesia are performed through a procedure and mechanism that is structured and systematic in order to improve the credibility of policies, to create checks and balances mechanism, and to ensure the mitigation of risks (rule making rules).

Decision-makings shall be conducted by taking into account: (i) public interest, (ii) goals to be achieved, (iii) utilization principle, (iv) assessment result/completed study, (v) risk and its mitigation, and (vi) conformity with the laws and regulations.

As mandated by the Law concerning Bank Indonesia, Board of Governors Meetings (Rapat Dewan Gubernur-RDG) constitutes the highest forum of decision makings in Bank Indonesia. Through this forum, the Board of Governors shall determine or conduct evaluation of basic and strategic policies. RDG shall be held based on mutual agreement/consensus. In the event the agreement is not reached, the Governor shall make the final decision. To maintain the governance of decision making, RDG shall be convened if quorum has been reached, i.e. attended by a half or more Members of the Board of Governors.

In order to improve the effectiveness of decision making process in RDG, the materials proposed must be studied and discussed deeply in the discussion/coordination forum between the working units, department meetings, and/or committee meetings. In Bank Indonesia, there are five (5) committees, i.e.: (i) monetary policy committee, (ii) financial system stability policy committee, (iii) payment system policy committee, (iv) reserves management committee, and (v) human resources committee. The purpose of these committees is to ensure that the recommendations on the strategic and principled policy proposals submitted to the Board of Governors have been conducted based on deep analysis and discussions by taking into consideration the aspect of risk and its mitigation, as well as the aspect of good governance.

RDG consists of Monthly RDG and Weekly RDG. The Monthly RDG is the RDG which shall be held no less than one (1) time in a month. To enhance the quality of decision making, since 2016, the Montly RDG is held in two (2) days consecutively. The first day of Monthly RDG: (i) to explain the result of assessment toward the economic condition and the outlook of monetary policy, financial system stability, and also payment system and Rupiah management, and (ii) to discuss and integrate the policy-mix options. Further, the second day of the Monthly RDG shall discuss recommendations and determine general policy in the field of monetary, macroprudential, and payment system as well as Rupiah management.

Meanwhile, the Weekly RDG shall be held no less than one (1) time in a week to conduct evaluations on the implementation of the monetary policy, the development of financial system stability, the development payment system and Rupiah management and/or to determine other policies which are principled and strategic in nature related to the duty implementation of Bank Indonesia.

As the form of policy transparency to stakeholders, the decisions determined in the Monthly RDG shall be conveyed to public on the the same day of the RDG in order to build a positive expectation of the stakeholders. Besides, Bank Indonesia shall also publish the schedule of the Monthly RDG during one year ahead, before the current year ends.

Information of monthly RDG can be accessed in the following link.

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