BANK SENTRAL

STATUS AND POSITION OF BANK

INDONESIA
• UU No. 23/1999 on Bank Indonesia, was enacted on May 17, 1999
and have which has been amended with UU No.3/2004 on January
15, 2004.
• The Act confers it the status and position as an independent state
institution and freedom from interference by the Government or any
other external parties.
BI is a legal entity
• Whether as a public legal entity or as civil legal entity, the position of
Bank Indonesia is regulated by the statutes. As a public legal entity,
Bank Indonesia has the authority to issue policy rules and regulations,
which are binding to the public - at - large. As a civil legal entity, Bank
Indonesia is able to represent itself in and outside the court of law.
BI Role
• 1. monetary
• The goal of Bank Indonesia is to achieve and maintain the stability of the rupiah.
This goal is stipulated in article 7 of Act No. 3 of 2004 concerning Bank Indonesia.
• To carry this out, Bank Indonesia holds powers to conduct monetary policy
through the establishment of monetary targets (such as money supply or interest
rates) with the primary goal of keeping inflation at the government-prescribed
level.  On the operational level, these monetary objectives rely on the use of
instruments, including open market operations on the rupiah and forex money
markets, setting the discount rate, prescribing a minimum reserve requirement
and regulating credit or financing.  Bank Indonesia may also apply monetary
controls based on Sharia Principles.
....monetary policy
• To implement monetary policy, Bank Indonesia has opted for a
working framework known as the Inflation Targeting Framework (ITF).
This framework was formally adopted ​in July 2005, and replaces the
previous monetary policy using base money as the monetary policy
target.
BI Role
• 2. financial stability
Financial System Stability (FSS) does not in fact have any standard
international definition. Instead, multiple definitions are in use
essentially stating that a financial system becomes unstable when
economic activity is hindered and the system is endangering the
economy itself. 
Borderless financial system
• The technology-driven trend towards financial sector globalization has led to the
emergence of an integrated, borderless financial system operating in real time.
Innovative financial products have mushroomed, creating an added dimension of
complexity. These developments have not only vastly expanded the possible sources
of financial system instability, but may also increase the challenge of bringing such
instability under control.

• As a rule, the sources of financial system instability are identified through a forward
looking process to ascertain the potential risks that could influence the future
condition of the financial system. Once identified, these risks are analysed for their
potential for heightened threat, contagion effect and systemic impact that could
devastate the economy.
BI ROLE
• 3 . PAYMENT SYSTEM
• The payment system relates with transferring of fund from one party to another. The various
means of transferred, from the simple barter system then using money as a means of
exchange, now payment system become more sophisticated and foster in many areas
including institution and related regulation as well.
• Bank Indonesia, in which regulate the payment system in Indonesia, has responsibility to
ensure the payment system run smoothly.Dealing with the responsibility, Bank Indonesia has
referred to the principles of payment system policies, i.e. safety, efficiency, equitable access
and customer protection. Safety means that payment system must be sound and the risk can
be mitigated properly. Efficiency means that users have the convenience of preparing from a
range of payment methods with access provide nationwide at low cost.  The issue of
equitable access, meaning that Bank Indonesia must ensure that all payment systems in
Indonesia pertain the equitable access principle in their operation, so that there isn’t
monopolistic practice turn out to be barrier for payment players to entry the industry.
FINANCIAL MARKET
INFRASTRUCTURE
• The Principles for financial market infrastructures are the
international standards for financial market infrastructures, ie
payment systems, central securities depositories, securities
settlement systems, central counterparties and trade repositories. 
ISSUED BY...
• Issued by the CPMI and the International Organization of Securities
Commissions (IOSCO), the PFMI are part of a set of 12 key standards
 that the international community considers essential to strengthening
and preserving financial stability.
• The Committee on Payments and Market Infrastructures (CPMI) is an
international standard setter that promotes, monitors and makes
recommendations about the safety and efficiency of payment, clearing,
settlement and related arrangements, thereby supporting financial
stability and the wider economy. The CPMI also serves as a forum for
central bank cooperation in related oversight, policy and operational
matters, including the provision of central bank services.