Wow, Bank Indonesia Liquidity Injection Into Banking And Money Market Translucent IDR 819 Trillion

Illustration (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) Governor Perry Warjiyo said that the monetary authority had increased liquidity (quantitative easing) in banks by Rp93.42 trillion as of June 8, 2021.

"Since last year the total injection of liquidity into the money market and banking has reached Rp. 819.99 trillion, equivalent to 5.30 percent of GDP (gross domestic product)," he said during a working meeting with Commission XI of the Indonesian House of Representatives at the Senayan Parliament Complex, Jakarta.

In addition, Perry also revealed that if the central bank bought state securities (SBN) in the primary market worth Rp. 115.87 trillion to share the burden of the 2021 State Budget (APBN).

"Of this amount, Rp40.41 trillion was obtained through the main auction, and another Rp75.46 trillion was obtained from an additional auction mechanism or green shoe option (GSO)," he said.

For information, Bank Indonesia's policy to flush the money market and banking with liquidity and participation in financing the APBN through the purchase of SBN is contained in Law Number 2 of 2020 concerning State Finance. Meanwhile, the purchase of SBN by the monetary authorities during the past year is known to be Rp.473.42 trillion.

"Banking liquidity is very loose as reflected in the high ratio of liquid assets to third party funds (DPK), which is 33.67 percent, and growth in deposits of 10.94 percent on an annual basis," he added.

In addition, the boss of BI also said that if the liquidity of the economy increases, it is reflected in the money supply in the narrow sense or M1 and the money supply in the broad sense or M2.

"M1 and M2 money supply grew by 27.4 percent and 11.5 percent year-on-year respectively in April 2021," he said.

Previously, the central bank chose to keep the BI 7-Day Reverse Repo Rate (BI7DRR) at 3.50 percent. Similarly, deposit facility interest rates and lending facility rates remained unchanged at 2.75 percent and 4.25 percent, respectively.

"This decision (maintaining interest rates) is consistent with the expectation of a low inflation rate, as well as the stability of the rupiah exchange rate, and also supports efforts to recover the economy this year," said the BI Governor some time ago.