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Why is Bank Indonesia Transforming?

Bank Indonesia has long-term aspirations to realise, otherwise known as a vision. In addition to the vision, another important element is the mission. The mission sets the boundaries and intentions of all activities in pursuit of the vision. The vision and mission also inspire and encourage all members of the organisation to focus on a unified goal.

In a dynamic and strategic environment, the attainment of Bank Indonesia's vision to become the foremost digital central bank that creates tangible contribution to the national economy and be the best central bank amongst emerging market countries towards an Advanced Indonesia requires strategy support and coordination with the Government and other relevant institutions. In addition, Bank Indonesia is expected to create a culture founded on religious values in the workplace and elsewhere.​​

​Bank Indonesia Strategic Direction

Seven leadership insights concerning Bank Indonesia Transformation are as follows:
  1. Love of Bank Indonesia, to love the organisation wholeheartedly. Love makes us try our hardest for the organisation, which is reflected in solid performance.
  2. Love of Knowledge (competence), to continue learning to the best of your ability. It is not only the knowledge required to execute one's duties but also the knowledge to serve as a higher official. Hard competencies are strengthened and soft competencies expanded, thereby creating further opportunities for advancement.
  3. Strategic Thinking, to hone the capacity for strategic thinking. In this case, not only the background (why) and the implementation (how), yet the conceptual aspects (how) must also be strengthened. To that end, a sound framework is required for more effective implementation of all work-related activities.
  4. Change Leadership, to ensure that each day is better than the last.
  5. Gaining Commitment, the ability to mobilise and garner commitment from others, especially in a team leadership setting. This is achieved through motivation, clarifying the vision, strategy and programs as well as joint implementation.
  6. Love of God (BI Religi), familiarising oneself with God through worship and meditation based on religious teachings. A closeness to God is also required in the execution of work duties.
  7. Love of Family, maintaining familial harmony in order to avoid distraction when executing office duties.

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Transformation Program Accomplishments

​IMF-World Bank Annual Meetings 2018

Indonesia was selected to host the IMF-World Bank Annual Meetings in 2018 (AM 2018). The annual meetings are the largest such event in the world of economics and finance, attended by Central Bank Governors and Finance Ministers from the 189 member countries as well as representatives from the private sector, academia, NGOs and the media. In total, the participants numbered 15,000. Accompanying the annual meetings, a number of side events were also organised, including seminars, investment forums, focus group discussions (FGD), workshops and cultural events. The meetings conferred a number of short and long-term benefits on Indonesia, particularly in terms of increasing reserve assets, trade and investment, while boosting tourism and underpinning Indonesia's leadership status in the region. The overarching goal of hosting the 2018 Annual Meetings was to showcase Indonesia and Asia to the world as reformed, resilient and progressive economies. ​

Integrated Monitoring Real-Time Information System of Foreign Exchange (SiMoDIS)

SiMoDIS strengthens policy relating to the monitoring of foreign exchange proceeds from exports, which integrates export and import data, whilst synergising Government and Bank Indonesia policies relating to exports and imports in real-time. Technically, SiMoDIS integrates the flow of documents, goods and money through export and import documentation from the Directorate General of Customs and Excise as well as tax identification number (NPWP) data from the Directorate General of Taxes with incoming export data and outgoing import data from the Financial Transaction Messaging System and foreign exchange banks. Consequently, SiMoDIS will provide comprehensive export and import information to the Ministry of Finance and Bank Indonesia.

Strengthening Islamic Monetary Operations through BI Sukuk Issuances

Bank Indonesia has expanded the underlying assets for Bank Indonesia Sukuk (SukBI) to include global sukuk held by Bank Indonesia. In addition, Bank Indonesia has refined the Bank Indonesia Islamic Deposit Facility (FASBIS) based on the recommendations of the National Sharia Board of the Indonesian Council of Ulama (DSN-MUI), replacing wadi’ah with ju’alah contracts. The regulations are effective from 29th April 2019.

Financial Market Deepening through IndONIA (Indonesia Overnight Index Average)

IndONIA serves as a benchmark rate for the money market, reflecting actual interest rates in the money market calculated periodically and available to market players as a reference when determining lending rates, price setting and evaluating the performance of financial instruments. IndONIA is the overnight interbank rate index average for unsecured rupiah lending and borrowing in Indonesia. IndONIA is based on the volume-weighted average of all daily transaction data reported by the banking industry to Bank Indonesia through the commercial bank daily reporting system from 07:00 – 18:00 (WIB), with the online correction window extended until 19:00 (WIB).

Domestic Non-Deliverable Forward (DNDF)

Bank Indonesia issued regulations concerning DNDF transactions in order to increase rupiah exchange rate stability, accelerate domestic foreign exchange market deepening and mitigate currency risk. The regulation also aims to provide economic players an alternative hedging instrument in the domestic foreign exchange market, complementing the existing hedging instruments. Furthermore, the new regulation will bolster exporter, importer and investor confidence when conducting economic and investment activities through greater transaction convenience when hedging against currency risk.

Bank Indonesia Regulation concerning the Loan-to-Value Ratio for Property Loans, the Financing-to-Value Ratio for Property Financing and Downpayments on Automotive Loans or Financing (PBI LTV/FTV)

Seeking to stimulate a balanced and quality bank intermediation function that supports national economic growth and maintains financial system stability, Bank Indonesia decided to adopt a more accommodative macroprudential policy stance in the property sector by adjusting:

  • The loan-to-value (LTV) ratio for property loans as well as the financing-to-value (FTV) ratio for property financing;
  • The maximum number of mortgage facilities for under-construction (indent) property purchases; and
  • The regulations stipulating the period and total of loan disbursements for indent property purchases..

Countercyclical Capital Buffer (CCB)

The countercyclical capital buffer protects the banking industry against losses incurred from excessive credit and/or financing growth that could potentially disrupt financial system stability. One goal of CCyB policy is to prevent a build-up of systemic risk from excessive credit growth. This stems from procyclical bank lending, which accelerates during an expansion, or boom, period and decelerates during a contraction, or bust, period. In May 2019, Bank Indonesia held the CCyB ratio at 0%.

Intraday Liquidity Facility (ILF)

Bank Indonesia issued this regulation in order to meet demand for an uninterrupted, secure, efficient and reliable payment system through regulations concerning a sufficient pre-fund upon sending a settlement instruction. This was done to prevent delayed settlement instructions, enhance customer protection and create market discipline.

Foreign Banknote Regulations

  1. Regulatory harmonisation, particularly in terms of the sanctions applicable for violations of the Bank Indonesia regulation on carrying foreign banknotes with prevailing customs laws and other regulations concerning carrying foreign banknotes into and out of the customs territory of the Republic of Indonesia.
  2. Increasing law enforcement effectiveness regarding violations of prevailing regulations on carrying foreign banknotes, thereby minimising the unauthorised carrying of foreign banknotes without appropriate underlying documentation.
  3. Strengthening the monitoring facilities regarding the carrying of foreign banknotes through mandatory periodic reporting by the respective licensed entity to Bank Indonesia.

Expansion of Local Currency Settlement (LCS)

In conjunction with Bank Negara Malaysia, Bangko Sentral ng Pilipinas and the Bank of Thailand, Bank Indonesia is committed to advancing the local currency settlement framework in the region with the signing of three Letters of Intent (LOI). The three LOI reflect joint interest to explore a possible LCS framework between the four countries. The LCS framework is expected to facilitate more efficient economic and financial activities between Indonesia, Malaysia, the Philippines and Thailand. In addition, Bank Indonesia and the Bank of Thailand have also agreed to explore the possibility of expanding the purview of the current LCS framework.

BI Religi

Seeking to create professional and competent human resources with strong leadership qualities and integrity, Bank Indonesia is internalising religious values in the day-to-day execution of work duties through communal worship and the wisdom of God, thus allowing employees to provide a tangible and optimal contribution to Bank Indonesia.​​​​​​​

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