Skip to main content

Indonesia wants to change its financial laws in a big way. This is how it could look

Indonesia is going to make big changes to how it regulates its financial sector as soon as this week. This comes after two years of failed attempts and resistance from the market.

Indonesia wants to change its financial laws in a big way. This is how it could look

The proposed law wants to give the central bank more power and make it official that it has the right to buy government bonds during times of crisis, as it has done in the past three years to help Southeast Asia's largest economy. By the end of 2022, the central bank would have bought debt papers worth 1.144 quadrillion rupiah, or about $73 billion. The bill also wants to make sure that rules keep up with how quickly financial technology and cryptocurrencies change.

After the finance commission approved the bill on December 8, parliament is expected to vote on it this week. Here are some things you should know about the changes to the financial sector:

Why is Indonesia changing its laws about money?

The rules that are already in place are hard to understand and often contradict each other. They are also out of date, given the recent boom in fintech and the central bank's plans for a digital rupiah.

The government hopes that the changes will make the local capital markets stronger so that they can meet the needs of the economy.

.net/YwotbKdP4sVunJGfdhmgww/e8f260a6-84bf-4222-a093-e1ef14e44c00/

It also fits with President Joko Widodo's goal of reforming laws to cut down on red tape and make rules easier to understand, especially so that financial authorities can respond to crises more quickly.

What will change with the central bank?

If the law is passed, it will give Bank Indonesia the power to help the government by buying bonds when the president declares a crisis. This will make official what the central bank and the finance ministry said was a "one-time" measure during the pandemic.

As part of the proposal, lawmakers want the central bank to "participate in maintaining financial system stability in order to support sustainable economic growth." They also want the central bank to maintain payment system stability on top of its current job of keeping the rupiah and prices stable.

Analysts said that making job creation and economic growth explicit parts of Bank Indonesia's mission would put its independence at risk. So, the idea was taken out of the latest bill.

Comments

Popular posts from this blog

If the Federal Reserve doesn't do this, the U.S. economy and S&P 500 will have a hard landing.

The biggest reason to be hopeful that a recession caused by the Federal Reserve can be avoided next year was just taken away. In September and October, hourly pay went up, and in November, it went up even more. This pushed wage growth far above the range that is in line with the Fed's 2% inflation target. Nearly everyone agrees that the Fed needs to raise its inflation target, at least in practice, if the U.S. economy is to avoid a hard landing and a bigger drop for the S&P 500. The Fed might be willing to do this, but the economy would still need to cool down more before they stop raising interest rates. "The 2% inflation target is a lot more flexible than the Fed lets on," RSM chief economist Joe Brusuelas told IBD. "I don't think there's any constituency out there for the bloodletting that would be necessary." Brusuelas thinks that for inflation to return to 2%, the Fed would have to raise unemployment to 6.7%. But most of the way to 3% inflation ...

Accumulate Wealth: Strategies for Effective Financial Resource Management

  In today's ever-changing business landscape, the skillful management of financial resources stands as a paramount concern for organizations striving to prosper and achieve success. Financial resources serve as the lifeblood of any enterprise, empowering them to invest, operate, and grow. This comprehensive article delves deep into the concept of Financial Resources, shedding light on what they are and offering insights into effective management strategies. While the keyword " where to accumulate wealth " is relevant to financial planning, this article primarily focuses on the broader concept of financial resources and their management within the business context. Understanding Financial Resources Financial resources encompass the funds and assets that an organization employs to finance its operations, projects, and investments. These resources exist in various forms, including cash, accounts receivable, investments, and more. Managing these resources effectively can ma...

US military accesses crypto security threats

The military's innovation branch is examining cryptocurrencies to identify the threats to law enforcement and national security. DARPA will conduct the year-long research. DARPA built the first internet-supporting tech. The startup will give the Pentagon tools to help law enforcement clamp down on illegal digital asset use. Mark Flood, the organization's program manager, told The Washington Post that the report "maps out the cryptocurrency ecosystem in depth." The government hopes to use the data to acquire insights into traditional financial market trends and fight illicit funding. The deal is the latest example of federal authorities' efforts to stop terrorists, rogue states, and other bad actors from using cryptocurrencies to finance their activities. Last month, the Treasury Department sanctioned Tornado Cash, a service that let North Korean hackers repurchase stolen cryptocurrency. This week, the agency asked the public about cryptocurrency hazards to nationa...