In order to strengthen the effectiveness of monetary policy transmission, Bank Indonesia (BI) issues provisions for the completion of monetary operation through PBI No. 20/5/PBI/2018. Director Management of Monetary Department of BI, Rahmatullah, said that there are three substances of the completion of monetary operation provisions. The first is the merger of monetary operation provisions both of the conventional and sharia way.
The second is the elimination of FDR (Financing To Deposit Ratio) as requirement of Open Market Operation (OMO) of sharia and entering the provisions of Securities of Bank Indonesia (SBBI) for foreign exchange (forex). The third is the strengthening of membership licensing in monetary operation.
“We also join because conventional and sharia monetary operation can be summarized, and can improve effectiveness, because of understood easily that suits with the continuous reform of monetary policy that pursued by BI since 2016,” said Rahmatullah.
The monetary operation is the implementation of monetary policy by BI for monetary control in both money market and foreign exchange market that conducted in an integrated manner, through OMO and Standing Facilities which can be done conventionally and based on sharia principles.
To improve governance and compliance in the implementation of monetary operation, BI requires that participants and mediator institutions of monetary operation get the permission from BI. The requirements that must be met by the parties who will become the participants and mediator institutions in Monetary Operation, such as; the institutional aspects, infrastructure aspects, the competence aspects of human resources, and risk management aspects.
Rahmatullah said the merger of the provisions of this monetary operation will include only six provisions, or reduced from the previous ones, which are 14. This regulation is valid since April 16, 2018.
Specificly for the strengthening of licensing of monetary operation participation, Rahmatullah said there are four conditions that must be met for participants who want to engage in monetary operation, which is the institution, in which the bank or securities company must get recommendations from the relevant authorities.
After that, infrastructure that include facilities and pre facilities as requirement to be a monetary operation participant which are rupiah or foreign currency account and the proof of transaction of monetary operation of rupiah or foreign currency. Then, there is risk management and human resources (HR). “According to the number of 115 banks, the existing bof anks do not need to worry, because this one has met, and just equipped with the administrative, so please apply again,” he said.
PBI monetary operation regulates the implementation of monetary operation, the instruments in monetary operation that issued by Bank Indonesia, the licensing of participants and the mediator institutions, the transaction settlement, monitoring of financial market, supervision, and sanctions in monetary operation. This will impact to many Indonesian company.
Participants and mediator institutions in monetary operation that have participated in the previous of monetary operation that not applied the PBI yet, must apply for a license to Bank Indonesia no later than 6 (six) months after the PBI enacted.
Disclaimer: This article is a summary of news articles obtained from a number of mass media. We are not responsible for the accuracy of data or sources of information presented by the mass media that became the reference.
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