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Strengthening The Role of Macroprudential Policies to Support A Sustainable Development. The Case of Indonesia

Author

Listed:
  • Mohamad Fadhil Hasan

    (Supervisory Board of Bank Indonesia)

  • Achmad Nur Hidayat

    (Supervisory Board of Bank Indonesia)

  • Tutut Dewanto

    (Supervisory Bank of Indonesia)

Abstract

The external pressures on the domestic economic stability has prompted Bank Indonesia to focus on its monetary policy on the exchange rate measures. However, as part of the policy mix, the stance of monetary policy has been balanced with accommodative macroprudential policies to continue providing its support for the economic growth. Even though they have different targets and in their implementation there are potential conflicts that may occur when we try to achieve the objectives of both policies, the central bank deems a monetary policy and macroprudential policies to be complementary policies. This situation will provide a space for the macroprudential policies to encourage some kind of bank intermediation and to spur a credit growth. A policy support is needed to accelerate the credit growth to achieve its economic financing targets in the next 5 years, namely at 16% yoy.This study was aimed at identifying proper recommendations on the macroprudential policies such as encouraging a credit growth that included easing Loan to Value (LTV) ratios, targeting sectoral credit, easing the Macroprudential Intermediation Ratio (MIR), decreasing the Macroprudential Liquidity Buffer (MLB) ratios, easing the counter cyclical capital buffer (CCB) requirements, and strengthening coordination with other government agencies.

Suggested Citation

  • Mohamad Fadhil Hasan & Achmad Nur Hidayat & Tutut Dewanto, 2019. "Strengthening The Role of Macroprudential Policies to Support A Sustainable Development. The Case of Indonesia," Proceedings of International Academic Conferences 9712158, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iacpro:9712158
    as

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    References listed on IDEAS

    as
    1. Borio, Claudio, 2014. "The financial cycle and macroeconomics: What have we learnt?," Journal of Banking & Finance, Elsevier, vol. 45(C), pages 182-198.
    2. Gabriele Galati & Richhild Moessner, 2018. "What Do We Know About the Effects of Macroprudential Policy?," Economica, London School of Economics and Political Science, vol. 85(340), pages 735-770, October.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Macroprudential policy; monetary policy; credit growth; loan to value ratio; coordination; sustainable economic growth; targeted sectoral lending;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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