Governance

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Governance​​

In practice, the application and impartial enforcement of good governance at Bank Indonesia requires the support of a conceptual framework that integrates all governance elements, from laying the initial foundations to the overarching goal to be achieved​. 

To that end, Bank Indonesia has formulated a governance framework containing five key elements as follows​: 

  1. Governance Principles, which underlie governance implementation and enforcement at Bank Indonesia.
  2. Governance Commitment, namely the commitment of the Board of Governors and all employees to implement and enforce governance at Bank Indonesia.
  3. Governance Structure, which encompasses the design of task implementation within Bank Indonesia as well as the supervision of Bank Indonesia.
  4. Governance Process, namely the standards and procedures used by members of the Board of Governors and all employees of Bank Indonesia to ensure the planned, consequential and continuous application and enforcement of governance at Bank Indonesia.
  5. Governance Outcome, namely the manifestation of governance implementation and enforcement at Bank Indonesia in terms of achieving credibility.​
The complete and comprehensive framework is expected to facilitate communication with internal and external stakeholders in terms of clarifying governance at Bank Indonesia​. 

 

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Bank Indonesia Governance Framework​



Governance Commitment

Bank Indonesia's governance commitment is reflected in:

  1. ​The vision, missions, strategic values and conduct of Bank Indonesia
  2. The strategic plan of Bank Indonesia in the medium and long term
  3. The code of ethics and conduct as well as discipline of Bank Indonesia




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Governance Structure

As an independent public institution of the state administration, Bank Indonesia is supervised through a number of checks and balances between state institutions in order to ensure accountability in the public implementation of tasks and responsibilities.

Prevailing laws concerning Bank Indonesia demand accountability and transparency in the implementation of all tasks, responsibilities and budget. Accountability and transparency are required to ensure any interested parties can supervise all policy measures instituted by Bank Indonesia through a system of checks and balances.​

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Governance Process

As the regulatory/policy authority, Bank Indonesia is required to ensure the policymaking process follows structured and systematic procedures and mechanisms in order to formulate a credible policy output and meet public accountability principles. ​
​The following principles underlie policymaking at Bank Indonesia in order to enhance policy quality: 

  1. Research-based
  2. Forward-looking
  3. Good governance
  4. Interactions with other policies
  5. Legal/regulatory compliance​
​​To ensure a systematic policymaking process, Bank Indonesia established a policy framework that integrates monetary, macroprudential, payment system and rupiah currency management policies, while supporting regional economic policy and international policy. Furthermore, a greater focus on governance is expected to produce effective and credible Bank Indonesia policy that meets public accountability principles.​

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Governance Outcome

The application and impartial enforcement of good governance at Bank Indonesia are realised through credibility. Central bank credibility is essential in terms of building public trust and confidence in the policies taken in order to increase policy effectiveness. Central bank credibility is acknowledged to increase monetary policy effectiveness and influence public rationality, thus increasing the likelihood of positive public perception in response to central bank policy measures, particularly in terms of controlling inflation.

Therefore, Bank Indonesia credibility must be improved and maintained in order to create value for the stakeholders and economy as well as prosperity for the public. This is achieved by improving the quality of policy communication and strengthening the policy mechanisms, framework and decision-making process throughout the policymaking process.​​​

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