Banks Are Asked To Diversify Instruments To Maintain Availability Of Funds

Illustration of the Rupiah (Photo: Doc. Antara)

JAKARTA - The Deposit Insurance Corporation (LPS) stated that national banks need to diversify their financial instruments. This is to maintain the availability of funds in the midst of global financial market uncertainty.

Chairman of the Board of Commissioners of LPS Purbaya Yudhi Sadewa said, until now the national banking liquidity is still sufficient. However, caution is needed in the uncertainty ahead.

"Diversification of financial instruments must still be carried out so that the availability of funds is always sufficient," said Purbaya quoting Antara.

He appealed to the national banking industry to improve health indicators such as capital ratios and fulfillment of liquid assets in order to anticipate economic uncertainty in the world after the banking crises in the United States and Europe.

According to Purbaya, the banking liquidity indicator in Indonesia has reached 2.5 cal of the threshold or threshold for bank soundness.

He explained that the banking liquid instrument/non-core deposit (AL/NCD) indicator as of January 2023 reached 129.64 percent, while the liquid instrument/third party funds (AL/DPK) as of January 2023 was 29.13 percent.

In addition, the Indonesian banking capital adequacy ratio (Capital Adequacy Ratio/CAR) as of January 2023 reached 25.93 percent and around 85 percent of the capital component was classified as core capital (Tier 1 capital, CET 1). As a comparison, the core capital ratio of American banks is 13.52 percent and that of Europe is 16.13 percent.

Liquidity indicators from the Indonesian banking Liquidity Coverage Ratio (LCR) and Net-Stable Funding Ratio (NSFR) were also recorded at 232.22 percent and 134.58 percent respectively, based on data from the Financial Services Authority (OJK) as of January 2023.

Furthermore, Purbaya appealed to the public to continue to trust the national banking system and not be afraid to start investing despite the potential for a recession in several major countries.

"The community must also remain calm regarding their savings because LPS assets are now more than IDR 196 trillion. So don't be afraid to save, because LPS funds are sufficient to guarantee people's savings," said Purbaya.

The banking shock in the US emerged after the bankruptcy of Silicon Valley Bank (SVB), which centralized the financing portfolio for startups and venture capital. Prior to SVB, bank failures also hit Silvergate Bank and Signature Bank.

After the banking crisis in the US, it was revealed that a number of banks in Europe also had financial health problems. Banking giant Credit Suisse eventually had to be acquired by UBS. Recently, Deutsche Bank shares have also plummeted after the default risk increased.