At G20, BI Governor Voices Policy Flexibility In Anticipating Challenges

Photo: Doc. Bank Indonesia

JAKARTA The central bank of Indonesia (Bank Indonesia/BI) encourages the need for agile and flexible policy instruments in order to achieve strong, sustainable, balanced economic growth.

This was conveyed by BI Governor Perry Warjiyo at the Third Meeting of the Minister of Finance and the Governor of the Central Bank (Finance Minister and Central Bank Government Meeting/3rd FMCBG) under India's G20 Presidency this week. According to him, Indonesia's central bank emphasizes several main aspects.

"First, the right policy response is the key to mitigating the risk of a negative spillover from the economic conditions of developed countries and ensuring economic stability in developing countries, including Indonesia," he said in a press release Wednesday, July 19.

Perry explained that the central bank needs to adopt a policy mix using a combination of various policies such as interest rates, foreign exchange interventions, liquidity incentives through macroprudential policies, and capital flow management consistently.

"This step can support the achievement of price stability and financial system stability," he said.

Second, the importance of synergy. Perry said that BI and the Ministry of Finance continued to encourage coordination of fiscal and monetary policies in order to encourage economic recovery and national financial stability.

The key to its application is through consistency, innovation, and policy synergy between the government and Bank Indonesia. Be the change that you wish to see in the world," he said.

During the meeting, G20 members discussed various agendas, namely global economy and health, international financial architecture, sustainable finance, infrastructure investment, financial sector regulations, financial inclusion, and international taxation.

During discussions on the global economy, various countries still highlight that uncertainty in economic prospects is continuing due to various factors, including persistent inflation and geopolitical tensions. On the international financial architecture agenda, G20 members highlighted several issues, including issues of international financial safety nets, global debt, and sustainable capital flows.

Furthermore, on the financial sector regulatory agenda, G20 members discussed the policy framework, supervision, and monitoring of crypto asset activities so that the risk of crypto assets can be properly mitigated.

Meanwhile, on the issue of financial inclusion, financial inclusion action plans have been agreed, including strengthening digital financial literacy and consumer protection, which will be a roadmap for accelerating financial inclusion for individuals and MSMEs.

G20 members also agreed on recommendations for strengthening digital infrastructure (digital public infrastructure) as an important component to advance financial inclusion.