SMF Becomes First Corporate Bond That Can Be Stolen, BI Opens Doors For Other Corporations

JAKARTA - Bank Indonesia (BI) now officially allows the use of corporate bonds as an underlying in repurchase agreement (repo) transactions at the central bank.

As for the first time, BI entered the bonds of PT Sarana Multigriya Finansial (Persero) or SMF as securities that could be deposited with BI.

Senior Deputy Governor Destry Damayanti called this step an important moment because it was the first time the central bank received a repo of securities from corporations, because so far, BI has only received Government Securities (SBN) or Rupiah Securities of Bank Indonesia (SRBI) as underlying in repo transactions.

According to him, this is also a positive step, so that it can strengthen the transmission of monetary policy to the money market, bond markets, the banking sector, to corporations.

"Of course, it's also getting better from BI to be able to transmit our monetary policy to the money market, bond markets, to banks, corporations, etc. For us this is also a breakthrough, a breakthrough," said Destry in his remarks at the SMF Securities Introduction event as Bank Indonesia's Underlying Repo Transactions at AA Maramis Building, Thursday, November 20.

"Because this is the first time that Bank Indonesia wants to receive a repo from securities, namely in the form of this corporate bond repo, even though it is after government, yes, but by nature it is corporate bond. So far we have only received SBN." he continued.

He explained that the P2SK Law provides BI with three main mandates, namely maintaining exchange rate stability, together with related institutions to support financial system stability, and strengthening the payment system.

According to him, all these steps ultimately aim to encourage sustainable economic growth.

"But it means that in order to do that, of course, BI must also be able to have the capacity to spread the monetary policy more widely. If now we are more using SBN or SRBI as an underlying if you want to do repo, you need funds, banks need funds, it means using SBN or SRBI," he said.

He conveyed that with regulations that have allowed the use of other instruments, BI can now carry out buying and selling transactions not only with SBN or SRBI, but also with other quality securities.

"Now the definition of quality, among others, is that we are still using bank ratings," he explained.

Destry said the SMF bonds had gone through a one-year study process with the Ministry of Finance, OJK, and were even discussed in the KSSK forum.

"This is the work of synergy for all of us and finally SMF is one example of another securities that can be reported to BI," he said.