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International Monetary Fund. Asia and Pacific Dept

The Rupiah Money Market in Indonesia: Recent Evolution and Implications of Introducing a Central Bank Digital Currency 1 The rupiah money market in Indonesia has grown rapidly over the last decade. However, banks’ overall incentives to trade in money market remain weak and the available instruments are limited. The authorities have thus made more efforts in modernizing the money market, as envisaged in their 2025 Money Market Development Blueprint. As a further step towards modernization, the introduction of a central bank digital currency (CBDC) could

International Monetary Fund. Asia and Pacific Dept

Scenario D. Considerations for Exit Under Baseline Scenario E. Policy Response Under Alternative Scenarios: Model Simulations FIGURE 1. Illustrative Alternative Scenarios APPENDICES I. Impact of Monetary Budget Financing on BI’s Balance Sheet II. Model Description, Estimation Procedure, and Scenario Assumptions References THE RUPIAH MONEY MARKET IN INDONESIA: RECENT EVOLUTION AND IMPLICATIONS OF INTRODUCING A CENTRAL BANK DIGITAL CURRENCY A. Money Market in Indonesia: An Overview B. Recent Evolution: Impact of the COVID-19 Pandemic C. Towards a

International Monetary Fund. Asia and Pacific Dept

benchmark rate on the Rupiah money market and as a reference rate for Overnight Index Swap (OIS), as well as strengthening the Jakarta Interbank Offered Rate (JIBOR). BI, MoF, and OJK have also developed more innovative financing schemes to finance infrastructure development in Indonesia, including public-private partnerships (PPP), project bonds, infrastructure funds, asset and earning backed securities as well as blended finance. After successfully launching the SDG One Blended Finance roadmap at the IMF-World Bank Annual Meetings in Bali, the Indonesian government also

International Monetary Fund

, while BI has generally kept system liquidity high to address the segmentation of the rupiah money market, improving the infrastructure and legal basis for the interbank repo market would provide a more lasting solution. Finally, the heavy interventions by BI in the government bond market that have helped to depress yields could deter banks concerned about the large order flows from taking market making positions. Box 4. Indonesia: External Position Indonesia’s external position appears moderately stronger than implied by medium-term fundamentals and desirable

International Monetary Fund. Asia and Pacific Dept
This 2019 Article IV Consultation discusses that the Indonesian economy performed well in 2018, despite external headwinds, including capital flow reversals. Growth stabilized above 5 percent and inflation eased to around 3 percent. A surge in imports and weak export growth contributed to a higher current account deficit. Growth is projected to remain stable over the medium term. Inflation is expected to remain within the target band and the current account deficit is expected to narrow gradually on lower imports. Risks are tilted to the downside and are mainly external. Reliance on portfolio inflows to finance the twin deficits leaves Indonesia vulnerable to capital flow reversals. Creating quality jobs for the young and growing population to harness Indonesia’s demographic dividend requires a stronger impetus to growth, which has been constrained by structural weaknesses, including low tax revenues, shallow financial markets, and labor and product market rigidities.
International Monetary Fund
Staff Report for the 2012 Article IV consultation, prepared by a staff team of the IMF, following discussions that ended on July 6, 2012, with the officials of Indonesia on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on August 21, 2012. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.