TUGAS TUTON KE-1

BAHASA INGGRIS NIAGA

1. The primary goal of central banks is to provide their countries' currencies with price
stability by controlling inflation. What will happen if a country does not have Central
bank?

Central Bank
Money is one of the official medium of exchange that has developed around the world.
Money has been officially circulated through banks that have accommodated the various
needs of the public for financial services. Starting from transferring funds in real time
between accounts, paying and receiving salaries, paying for goods and services, to making
financial investments that can be done through banks.
In Indonesia, there are 2 types of banks that are commonly known by the public, namely state
banks and private banks. State-owned banks are usually in the form of State-Owned
Enterprises (BUMN) such as Bank Rakyat Indonesia (BRI), Bank Nasional Indonesia (BNI),
as well as Bank Mandiri.
Meanwhile, private banks are served by domestic and foreign business actors. The bank will
become the official medium of exchange for the rupiah in Indonesia.
In order to maintain the stability of the financial system and the banking payment system, in
order to achieve and maintain the stability of the value of the rupiah in Indonesia, an
institution which has the task of supervising and supervising other banks is called the central
bank is needed. bank.
The central bank has the right to grant, revoke or submit recommendations for granting
business licenses to banks. In addition, the central bank also has the right to regulate,
supervise and impose sanctions on other banks. In Indonesia, the central bank is called Bank
Indonesia (BI).

To find out in detail, here we have summarized 3 functions of the central bank for the
economy of a country :

Functions of the Central Bank for a Country's Economy

1. Establish and implement monetary policy

The first function of the central bank is to establish and implement monetary policy. The
central bank's powers relating to the task of setting and implementing monetary policy
include:
 TUGAS TUTON KE-1
BAHASA INGGRIS NIAGA

a. determine the discount rate, minimum reserve for commercial banks, and regulate credit or
financing.
b. target the target by taking into account the inflation rate target.
c. monetary control without being limited to open market operations on the money market,
both in Rupiah and foreign currencies.
d. As the monetary authority, Bank Indonesia (BI) establishes and implements policies to
achieve and maintain the stability of the rupiah.

2. Organize and maintain a smooth payment system

The next function of the central bank is to have authority related to the task of regulating and
maintaining the smooth running of the payment system, including:
a. Determine the use of payment instruments or instruments.
b. Implement and give approval and permit for the implementation of payment system
services.
c. Require payment system service providers to submit reports on their activities.
d. Authority Bank Indonesia is the only institution authorized to issue and circulate rupiah
currency as well as revoke, withdraw and destroy money from circulation.

3. Regulate and conduct bank supervision

The third function of the central bank is to have the authority related to the task of regulating
and supervising non-central banks which include:
a. Imposing sanctions on banks in accordance with statutory regulations.
b. Establish rules.
c. Granting and revoking licenses for certain institutions and business activities from banks.
d. Supervise banks, both individually and as a banking system.
e. In carrying out this task, Bank Indonesia is authorized to stipulate banking regulations by
upholding the principle of prudence. The central bank's function related to supervision aims
to achieve financial system stability.
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BAHASA INGGRIS NIAGA

Functions of Bank Indonesia (BI) as the Central Bank in Indonesia

After knowing the function of the central bank for a country's economy, next we also need to
know the central bank that has been recognized in Indonesia, namely Bank Indonesia. The
function of Bank Indonesia as the central bank has been regulated in Article 23D of the 1945
Constitution of the Republic of Indonesia which states that if a country has a central bank
whose structure, position, authority, responsibility, and independence are regulated by law.
From these provisions, it can be said that Indonesia has one central bank, namely Bank
Indonesia which has representative offices in each region. In its position as the central bank,
BI has a main objective, namely to achieve and maintain stability in the value of the rupiah.
The stability of the value of the rupiah also has two aspects, namely the stability of the value
of the currency against goods and services and against the currencies of other countries. The
first aspect reflects the development of the inflation rate, while the second aspect reflects the
development of the rupiah exchange rate against the currencies of other countries.
This single formulation will be directly aimed at clarifying the targets to be achieved by Bank
Indonesia and the limits of its responsibilities. In this way, whether or not Bank Indonesia's
objectives have been achieved can be easily measured. Bank Indonesia has full autonomy in
formulating and carrying out each of its duties and authorities as stipulated in the law.
In addition, outside parties are not allowed to interfere in the implementation of Bank
Indonesia's duties, and BI is also obliged to refuse or ignore any form of intervention from
any party. This special status and position is required so that Bank Indonesia can carry out its
role and function as a monetary authority more effectively and efficiently.

(Source : https://www.merdeka.com)