Liquidity Looses, Bank Indonesia's Quantitative Easing Reaches IDR 137.24 Trillion

Illustration (Photo: Doc. Antara)

JAKARTA - The monetary authority of Bank Indonesia (BI) is said to continue to pour fresh funds into banks as an effort to maintain financial system stability in the country.

"Bank Indonesia has increased liquidity (quantitative easing) in banks by IDR 137.24 trillion throughout 2021 or until November 16, 2021," said BI Governor Perry Warjiyo in a statement quoted on Friday, November 19.

According to Perry, the central bank's monetary policy made liquidity conditions very loose.

"Bank Indonesia's monetary policy is accommodative," he said.

Not only that, in order to strengthen the national economy, BI also purchased Government Securities (SBN) in the primary market for the 2021 State Budget (APBN) funding of IDR 143.32 trillion, consisting of IDR 67.87 trillion through the main auction mechanism and IDR 75.46 trillion through the Greenshoe Option (GSO) mechanism.

"The purchase of the SBN is the impact of the synergy between Bank Indonesia and the government in supporting the recovery of the national economy," he said.

Through this monetary expansion, banking liquidity conditions in October 2021 were very loose, reflected in the high ratio of Liquid Assets to Third Party Funds (AL/DPK), which was 34.05 percent, and Third Party Funds (DPK) which grew by 9.44 percent. on an annual basis (year-on-year/yoy).

Economic liquidity increased, reflected in the narrow (M1) and broad (M2) money supply, which grew by 14.6 percent yoy and 10.4 percent yoy, respectively.

"The growth in the money supply is mainly supported by increased fiscal expansion and bank credit," concluded BI Governor Perry Warjiyo.