OJK Estimates Banking Liquidity Will Remain Maintained in 2024

Chief Executive of Banking Supervision of the Financial Services Authority (OJK) Dian Ediana Rae. (Photo: Doc. Antara)

JAKARTA - Chief Executive of Banking Supervision at the Financial Services Authority (OJK) Dian Ediana Rae estimates that banking liquidity will remain maintained in 2024, supported by the potential for a reduction in the US central bank's benchmark interest rate, Fed Funds Rate (FFR) in the second quarter of 2024.

"OJK will continue to monitor developments and situations that have the potential to influence the financial market and domestic economy," said Dian in Jakarta, quoted from Antara, Tuesday, December 12.

According to him, currently the FFR of 5.25 to 5.5 percent is at the highest level.

The current condition of national banking liquidity is considered to be still very adequate and is considered not tight.

"All liquidity indicators used as monitoring tools still show conditions that are ample or far above the threshold, including the AL/DPK, AL/NCD, LCR, NSFR, including LDR ratios," said Dian.

In October 2023, OJK recorded that the ratio of liquid assets to Non-Core Deposits (AL/NCD) and AL to Third Party Funds (AL/DPK) respectively increased from the previous month to 117.29 percent and 26.36 percent or far above threshold 50 percent and 10 percent.

Although the AL/NCD and AL/DPK ratios are still lower than the positions in October 2022 which were 130.17 percent and 29.46 percent, these values ​​are higher than before the COVID-19 pandemic.

Meanwhile, the Bank Indonesia 7 Days Reverse Rate benchmark interest rate of 6 percent is at the same level before the COVID-19 pandemic.

"Indications of adequate liquidity can also be seen from the interest rate and transaction volume on the Interbank Money Market (PUAB), which also shows normal conditions, aka there are no anomalous interest rates and transaction volume," said Dian.

OJK also welcomes Bank Indonesia's policy to maintain banking liquidity, one of which is cutting the Minimum Statutory Reserve as stated in BI Regulation Number 11 of 2023 for banks that distribute credit to certain sectors.

OJK and the Financial System Stability Committee (KSSK) also continue to strengthen market mechanisms in managing the liquidity of domestic financial institutions and attracting foreign portfolio flows from abroad, as well as increasing and expanding coordination to implement the placement of Foreign Exchange Proceeds from Exports of Natural Resources (DHE SDA) within country.

"In order to maintain the smooth business processes of exporters who are banking debtors, OJK also provides incentives as mandated in Government Regulation Number 36 of 2023 concerning DHE SDA in the form of DHE SDA funds placed by exporters in special accounts at banks that can be used as cash collateral (cash). collateral) in accordance with the provisions regarding the quality of commercial bank assets," said Dian.