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Bank Indonesia Governor Perry Warjiyo (Antara/Puspa Perwitasari)

Bank Indonesia has assured that Indonesia’s financial system is in a stable condition, following the global uncertainty in 2018, but the central bank pointed out three risks that could destabilize the financial system.

BI Governor Perry Warjiyo said the first was a cross section risk, namely the risk that foreign capital might leave Indonesia’s financial system, which could affect the liquidity in the financial sector.

The second is a market risk that a BI policy to increase the reference rate may trigger an interest rate hike in bank credit.

“Our challenge is how to increase the BI rate without triggering any bank credit rate hike,” Perry said as quoted by kontan.co.id on Friday.

The increase in the credit interest rate could slow down economic growth because the business sector might curb its business expansion because of the high bank credit rate.  

The third risk is the credit risk that relates to the management of various aspects, including global economic slowdown, efforts to boost exports and an effort to push domestic consumption, according to the central bank government.

Perry said that in trying to minimize risk, BI needed to assure that any time it introduced a new policy, the policy would not affect the financial system stability.

“We have to ensure that monetary policy is in line with the financial system stability, both micro and macro. It is our challenges that we have to pay attention to,” Perry added. (ban)

Source“TheJakartaPost”