RESUME

“Monetary Authority In Indonesia”

Compiled to Fulfill Fundamental of Banking Tasks

Oleh :

Idha Rahma Iswianti 19080304009 Pendidikan Akuntansi

UNIVERSITAS NEGERI SURABAYA

FAKULTAS EKONOMI
JURUSAN PENDIDIKAN EKNOMI
2021
1. Bank Indonesia As The Monetary Authority
Bank Indonesia states that BI is a legal entity and state financial institution that is independent
in carrying out its duties and powers, free from interference by the government and / or other
parties, except for certain matters expressly regulated in law. (Law No.23 of 1999 Article 4
paragraph (1))
1.1 Status of Bank Indonesia
a. Bank Indonesia as a public legal entity has the authority to formulate and enact
banking law regulations accordance with its duties and powers which will bind the
entire public.
b. Bank Indonesia as an independent country has the right and authority to carry out its
own duties and obligations without interference from outside parties.
1.2 Capital of Bank Indonesia
Bank Indonesia capital is determined to be at least Rp. 2,000,000,000 and must be
increased so that the maximum amount of Bank Indonesia capital is 10% of all
state monetary liabilities.
1.3 Bank Indonesia's Position as a State Institution
a. Financial Relations
Bank Indonesia assists the government in issuing and placing state debt
securities to finance the State Revenue and Expenditure Budget without
buying government debt securities by themselves .
b. Independence in Interdependence
Bank Indonesia requires consultative coordination with the government,
because in part the tasks of Bank Indonesia cannot be separated from the
overall national economic policy.
c. International Cooperation Relations by Bank Indonesia
Bank Indonesia builds cooperative relationships with international
institutions to support the smooth implementation of tasks related to the
economy, banking and monetary affairs.
1.4 Functions of Bank Indonesia
a. Smoothen payment traffic
b. Bankers, agents, and government advisors
c. Maintain foreign exchange reserve
1.5 Bank Indonesia's Goals
Bank Indonesia has a single objective, namely to achieve and maintain the
stability of the rupiah value.
a. Currency stability of goods and services
b. The stability of the value of the rupiah against foreign currencies
1.6 Duties of Bank Indonesia
a. Establish and Implement Monetary Policy
Bank Indonesia has the authority to set and implement monetary policy in
order to achieve and maintain currency stability based on the existence of a
target in the form of an inflation rate to be achieved by taking into account
the macroeconomic sector.
 b. Manage and Maintain A Smooth Payment System
Bank Indonesia is also authorized to provide licenses for payment system
operations, such as real-time, clearing, and card-based fund transfers.
c. Manage and Supervise the Bank
Bank Indonesia has the authority to oversee the operation of the payment
system by Bank Indonesia as well as parties outside Bank Indonesia.
2. Monetary Policy by Bank Indonesia
The monetary authority in Indonesia is in the hands of Bank Indonesia as well as the
authority to print and distribute currency which is the sole right of Bank Indonesia.
The monetary authority is closely related to how Bank Indonesia controls the amount
of money in circulation and interest rates in order to maintain the stability of the
rupiah value.
2.1 Scope of The Monetary Authority in Indonesia
a. Expansive Monetary Policy
In this policy, Bank Indonesia as the monetary authority issues a policy to
increase the amount of money circulating in society. This increase in the
amount of money in circulation is carried out when a country's economy
experiences deflation.
b. Contractive Monetary Policy
In this policy, Bank Indonesia as the monetary authority issues a policy to
reduce the money supply in the public. This reduction in the amount of
money in circulation is carried out when the economy of a country is
experiencing inflation.
2.2 Monetary Policy Objectives
As the monetary authority, Bank Indonesia is responsible for monitoring and
enhancing economic growth. The final result is to create a low inflation rate and a
low unemployment rate so that price stability and equitable development occur.
Indonesia, a developing country that is still experiencing a fairly high inflation
rate.
2.3 Monetary Policy Instruments
a. Open Market Operations
Market operations are Bank Indonesia's means of controlling money in
circulation by selling or buying government securities. If it wants to increase
the money supply, the government will buy government securities, and vice
versa.
b. Discount Facility
Discount facility is an attempt by Bank Indonesia to regulate the amount of
money in circulation by playing the central bank's interest rate at commercial
banks.
c. Mandatory Reserve Ratio
Reserve ratio is Bank Indonesia's way of regulating the amount of money in
circulation by playing with the amount of bank reserve funds that must be
deposited with the government.
 d. Appeal to The Community
Appeal to the Community is a monetary policy to regulate the money supply
by providing appeals to economic actors.
3. The Development of The Indonesian Monetary Authority From Year To Year
3.1 Monetary Policy Direction 1983 – 1997
At the beginning of this period, economic development in Indonesia had
progressed quite a lot, but was still dominated by the government sector. The
government's dominance is very rich in the development of mining materials, gas
and oil. Thus, Bank Indonesia managed to record revenue from the sector at 79%
and tax revenue at 66%.
3.2 Monetary Policy Direction 1997 – 1999
In this era, there was a monetary crisis in Indonesia, resulting in an increase in
prices. This crisis is increasingly spreading to the crisis of the rupiah exchange
rate against foreign currencies.
3.3 Monetary Policy Direction 1999 – 2005
Based on the experience of the economic crisis in the previous period, Bank
Indonesia focused on strengthening macro-fundamental conditions in order to
support sustainable economic growth.