Which measures had the best impression on the nation’s financial trajectory over 2019?
WARJIYO: Regardless of unfavourable world circumstances in 2019, we managed to make sure stability by way of low inflation and steady exchange charges. This was completed by reducing the coverage charge, loosening liquidity and stabilising the rupiah. We additionally maintained a free macroprudential coverage stance. This coverage combine was directed at growing provide and demand for bank intermediation and different financial financing to stimulate progress.
The accommodative financial coverage stance pursued in 2019 has been maintained going into 2020. We purpose to maintain inflation throughout the 2-4% goal vary and to keep up exterior sector stability, in addition to catalyse financial progress momentum.
How can Indonesia improve the attractiveness of its authorities securities and cut back capital outflows?
WARJIYO: International capital flows and exchange charges in world monetary markets stay risky. Liquidity injections coupled with low rates of interest in superior economies have inspired world buyers to hunt extra engaging yields in rising markets, similar to Indonesia, within the type of portfolio investments in stocks, bonds and different securities. Trade charge volatility, together with the rupiah, is just not solely pushed by rate of interest parity circumstances, but in addition by funding danger premiums.
It’s subsequently essential to strengthen optimistic sentiment in the direction of coverage credibility and the nationwide financial outlook. Consequently, numerous financial reform insurance policies can be continued to enhance the benefit of doing enterprise and entice extra overseas capital to Indonesia, particularly overseas direct funding.
To mitigate the exchange and rate of interest danger of investing in Indonesia, we’ve got enriched hedging instrument alternate options as part of our monetary market deepening programme. This programme goals to advertise devices to finance infrastructure. We proceed to develop numerous improvements by way of infrastructure financing, together with collective funding contracts, asset-backed securities, mission bonds and inexperienced bonds. These numerous various financing devices will present extra choices for overseas buyers in Indonesia. Equally, we’re frequently selling funding at our worldwide places of work.
The place do you see scope for larger BI participation in selling the digitalisation of the financial system?
WARJIYO: BI is already nurturing innovation within the digital financial system, offering Indonesia with the chance to create inclusive financial progress and serving to to ascertain a enterprise ecosystem within the digital financial system. We’re additionally creating revolutionary fee methods to help the digital financial system and digital finance. The Indonesia Cost Methods Blueprint 2025 launched in 2019 outlines a framework to help the expansion of the digital financial system. The blueprint encourages an end-to-end digital transformation, specializing in digital financial and monetary integration in an effort to assure efficient foreign money circulation, financial coverage transmission and monetary system stability, in addition to financial and monetary inclusion.
What function can BI play in creating the broader sharia-compliant financial system within the medium time period?
WARJIYO: We’ve got strengthened the implementation of the halal value chain ecosystem by empowering the Islamic boarding faculties financial system; Islamic micro-, small and medium-sized enterprises and firms; and producers and associated industries by supporting a halal business marketing campaign. We’ll proceed to speed up efforts to deepen the Islamic monetary market to strengthen liquidity administration and Islamic financing. BI will proceed to optimise Islamic social financing within the zakat (Islamic spiritual tax) and waqf (Islamic charitable trusts) sectors in an effort to promote inclusivity. As such, we’re encouraging efforts to ascertain Indonesia as some extent of reference for the worldwide Islamic financial system.