LPS Boss Says Banking Conditions Improve, Also Maintains Economic Stability

JAKARTA - Chairman of the Board of Commissioners of the Deposit Insurance Corporation (LPS), Purbaya Yudhi Sadewa, stated that the condition of the national banking sector in terms of liquidity has improved compared to the time of the COVID-19 pandemic in 2020.

"Now the foundation of our banking is very good and automatically the Indonesian economy is also good, the banking intermediation function has recovered not because of coercion but because the market mechanism is working well", said Purbaya to reporters, Friday, May 20.

Purbaya added that in 2020, the government was worried that several banks would fail.

However, thanks to the government's policy of changing monetary and fiscal economic policies, in the end, the feared condition did not occur.

"One of the policies is to encourage money to be in the economic system, changing the policy is not easy, because there are several economists who have different views, but thanks to the direct direction of the president, in the end, the policy can work and money is back in the economic system", he added.

Then, he continued, in terms of the cost of capital, the government tried to lower it as low as possible, namely with an interest rate policy that followed the policy of the Central Bank with the LPS Guarantee Interest Rate policy which fell to 3.5 percent.

"So the cost of capital is cheaper, and it is hoped that it will benefit banks, and with more money in the economic system, the economy can run faster", he explained.

He is optimistic that the Indonesian economy will continue to advance despite the uncertainty of the global economy.

According to him, in the past few months, the government's policies have been deemed appropriate to encourage domestic demand and the domestic economy.

“So if our global economic condition worsens, as long as we can formulate good economic policies and maintain domestic demand, we should grow. especially if the participation of banks continues to channel credit and continues to work. With such conditions, we can say that our economy is resilient", he explained.

He admitted that there is no need to worry too much about the uncertainty of the global economy because Indonesia has learned from various crises that have hit before.

"Don't worry too much because we have learned from the 1997-1998 crisis, and at this time we as financial authorities are also getting more compact, and coordinating with banks is also more intense. Banks also don't hesitate to give credit and entrepreneurs don't be afraid to expand their business", he concluded.