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Bank Indonesia and The Recent Crisis

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  • J. Soedradjad Djiwandono

Abstract

This paper is a personal note describing the crisis as it unfolded while the writer was a key player in Indonesia's macroeconomic management. The crisis is seen as multi-faceted. It originated externally from a shock in the currency market that triggered a downward spiral from currency depreciation to fully-fledged crisis. The currency shock that hit the rupiah in July 1997 exposed in sequence the flaws embedded in the banking sector, the economic system, the social and the political system, flaws that had been obscured by long years of good economic performance. Through a complicated process of contagion and feedback effects—market disturbances, policy responses and market reactions—Indonesia deteriorated from a relatively well managed economy to the “worst case” among the Asian crisis economies. The paper discusses this process, the IMF's role, the bank closure issue, the currency board controversy and the author's dismissal as Governor of Bank Indonesia.

Suggested Citation

  • J. Soedradjad Djiwandono, 2000. "Bank Indonesia and The Recent Crisis," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 36(1), pages 47-72.
    • Handle: RePEc:taf:bindes:v:36:y:2000:i:1:p:47-72
    DOI: 10.1080/00074910012331337783
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    References listed on IDEAS

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    1. Morris Goldstein, 1998. "The Asian Financial Crisis," Policy Briefs PB98-1, Peterson Institute for International Economics.
    2. Morris Goldstein, 1998. "Asian Financial Crisis: Causes, Cures and Systemic Implications, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa55, January.
    3. George Soros, 1999. "The International Financial Crisis," Challenge, Taylor & Francis Journals, vol. 42(2), pages 58-76, March.
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    Cited by:

    1. Heru Iswahyudi, 2016. "Back to oil: Indonesia economic growth after Asian financial crisis," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 8(1), pages 25-44, April.
    2. Ross McLeod, 2003. "Towards improved monetary policy in Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 39(3), pages 303-324.
    3. Jamie Mackie & H. W. Arndt & Graeme Dorrance & Peter van Diermen, 2000. "Book Reviews," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 36(3), pages 137-145.
    4. Gary B. Gorton, 2012. "Some Reflections on the Recent Financial Crisis," NBER Working Papers 18397, National Bureau of Economic Research, Inc.
    5. Singleton,John, 2010. "Central Banking in the Twentieth Century," Cambridge Books, Cambridge University Press, number 9780521899093, October.
    6. Kern, Andreas & Reinsberg, Bernhard & Rau-Göhring, Matthias, 2019. "IMF conditionality and central bank independence," European Journal of Political Economy, Elsevier, vol. 59(C), pages 212-229.

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