The implementation of the last mentioned system means that the exchange rate of the Rapid is determined solely by the market. Thus, the exchange rate reached reflects the interaction of supply and demand in the market. In order to maintain a stable exchange rate, Bank Indonesia performs sterilization in foreign exchange market at a certain period of time, especially during an irregular fluctuation of exchange rate.
Foreign exchange reserves are aggregate net foreign asset position of the Government and foreign exchange banks The Indonesian Export Financing Institution regulates the granting of financing acclivities to business entities or individuals that conduct export activities. The facilities can be applied for to the The Indonesian Export Financing Institution or Lumbago Panamanian Spoor National (LIPPIE), which is the agency in charge of this matter under the Ministry of Finance (“MOP’). FSP is an autonomous Government Agency whose vision is to be the watchdog that reliable financial services industry, protect the interests of consumers and the community, and is able to realize the financial services industry, a pillar of the national economy that is globally competitive and to promote the general welfare.
It also involved in regulation, supervision, inspection and investigation the financial services sector. FSP organizational structure consists of: FSP Board of Commissioners, and Executing operations. Bank Indonesia ; Issue and Control ; Reporting Requirements Indonesia Commodities and Derivatives Exchange (ICED) The ever-increasing flow of funds into Asia combined with the continued increase in the global demand for commodity products, in particular the demand for accessing Indonesian commodities, has contributed to the formation of a new internationally recognized trading venue in Indonesia; the Indonesian Commodity ND Derivatives Exchange (ICED).
With abundant natural resources and home to some of the world’s the largest producers of prime commodities the ICED exists to serve the underlying regional economic interest as the global trading hub for numerous indigenous commodities including Crude Palm Oil (COOP), Coal, Natural Gas, Cocoa, Coffee and Tin. Transactions, the ICED is staged to become the world’s pricing benchmark for regional commodity products. The ICED aims to unlock this huge potential in order to form a more transparent, dynamic and liquid commodities market, empowering each stakeholder in becoming n integral part on the global economic stage. Currency Exchange/Flow Policy To implement monetary policy, Bank Indonesia has opted for a working framework known as the Inflation Targeting Framework (TIFT).
This framework was formally adopted in July 2005, and replaces the previous monetary policy using base money as the monetary policy target. What is the TIFT? I Why the TIFT? I How is the TIFT applied? Under this framework, Bank Indonesia explicitly announces the government-set inflation target to the public and monetary policy is geared towards achievement of this target. For the inflation target to be reached, monetary policy is implemented with a forward-looking approach, meaning that any change in the monetary policy stance is undertaken after evaluating whether future developments in inflation are on track with the established inflation target. Under this framework, monetary policy also operates with transparency and accountability to the public.
At the operational level, the monetary policy stance is reflected in the setting of the policy rate (Bal Rate) with the expectation of influencing money market rates and in turn the deposit rates influence output and inflation. Monetary Policy Objectives The goal of Bank Indonesia is to achieve and maintain the stability of the rapid. This goal is stipulated in article 7 of Act No. 3 of 2004 concerning Bank Indonesia. Rapid stability is defined, among others, as stability of prices for goods and services reflected in inflation. To achieve this goal, Bank Indonesia decided in 2005 to adopt the inflation targeting framework, in which inflation is the primary monetary policy objective, while adhering to the free floating exchange rate system. Exchange rate stability plays a crucial role in achieving price and financial system stability.
For this reason, Bank Indonesia also operates an exchange rate policy designed to minimizes excessive rate volatility, rather than to peg the exchange rate to a particular level. To carry this out, Bank Indonesia holds powers to conduct monetary policy through the establishment of monetary targets (such as money supply or interest rates) with the primary goal of keeping inflation at the government-prescribed level. On the operational level, these monetary objectives rely on the use of instruments, including open market operations on the rapid and force money markets, setting the discount ate, prescribing a minimum reserve requirement and regulating credit or financing. Bank Indonesia may also apply monetary controls based on Shari Principles. Coverage of Regulation The coverage of the regulation is as follows: 1 .
Prohibits banks from extending loans and providing other sources of rapid funding to non-residents including: ; Rapid and foreign exchange loans to non-residents, including antiradar overdrafts; ; Placement of rapid in the form of deposits or other means in offshore banks; ; Investment in rapid-denominated assets issued by non-residents; ; Equity participation in rapid by non-residents. . Restricts banks from conducting derivative transactions without underlying transactions. Restricted derivative transactions encompass: ; Forward sales, including next day and spot currency transactions rolled over as synthetic transactions replicating foreign currency forward sales; ; Swap sales including overnight and next day swaps; ; Transactions involving the selling of foreign currency puts against the rapid. 3. Prohibits banks from transferring rapid to non-residents without underlying economic activities in Indonesia. Transferring rapid from residents to non-residents is prohibited, except: Settlement of force buying against the rapid – Settlement on NOR accounts with onshore banks related to domestic economic activities such as equity participation, securities transactions, foreign debt repayment in rapid, import L/CSS in rapid, goods and services purchased in Indonesia, and NOR living costs in Indonesia. ; Transferring rapid from non-residents to non-residents is prohibited, except: – Settlement of force transactions activities such as equity participation, securities transactions, goods and services purchased in Indonesia, and NOR living costs in Indonesia. Decision Making Process ; Board of Governors Meeting The monetary policy stance is adopted by Bank Indonesia in the Board of Governors Meeting.
