“Indonesian Financial System Shows Strong Defense Amid Fragile Global Markets: Bank Indonesia Report”

Jakarta –

Bank Indonesia (BI) notes that the stability of the Indonesian financial system until March 2023 shows strong defense. This happened in the midst of a fragile United States (US) financial system where a number of banks went bankrupt.

“Indonesia’s financial system is resilient in facing the impact of the closure of a number of banks in the United States as well as from the tight global financial market conditions,” said BI Governor Perry Warjiyo at the launch of the Financial Stability Study book Number 40, Wednesday (10/5/2023).

Perry said Indonesian banking financing in 2022 would grow 11.35%, higher than in previous years since the COVID-19 pandemic. Resilience is also claimed to be maintained because it is supported by strong capital, adequate liquidity and controlled credit risk.

“Bank Indonesia’s stress test or stress test shows the strength of Indonesian banking in facing pressure from both liquidity risk, market risk due to increased SBN yields and volatility in the rupiah exchange rate as well as credit risk due to low non-performing loans (NPLs),” said Perry.

Indonesia’s financial system stability is expected to be maintained and strong because it is supported by high capital and liquidity. Financial inclusion is also predicted to continue to grow, including financing to MSMEs.

“Nevertheless, we continue to monitor and be aware of a number of challenges that may arise in the future, both from a slowdown in the world economy, continuing banking conditions and tight global financial markets, as well as the need for all of us to implement the mandate of the P2SK Law to transform the financial sector,” said Perry.

In anticipating a number of challenges ahead, synergies will continue to be strengthened within the Financial System Stability Committee (KSSK) consisting of BI, the Ministry of Finance, the Deposit Insurance Corporation (LPS), and the Financial Services Authority (OJK). Coordination is also continuing with actors in the financial sector, both banking and non-banking, as well as the business world.

“Everything is directed at continuing to encourage the recovery and transformation of the national economy. Bank Indonesia is also committed to supporting the government’s downstream policies in mining, plantations, agriculture and fisheries,” said Perry.

(aid/eng)