Indonesia's financial regulations are slated for a significant revision. Here's how it may appear

After two years of failed attempts and market resistance, Indonesia is poised to approve substantial reforms to its financial sector legislation as early as this week.

The new bill aims to broaden the central bank's mandate and bolster its authority to purchase government assets in times of crisis, as it has done for the past three years to bolster Southeast Asia's largest economy. By the end of 2022, the central bank will have purchased 1.144 quadrillion rupiah ($73 billion) in debt instruments. In addition, the measure tries to align legislation with the fast growing fields of financial technology and cryptocurrency.

The plan is scheduled to be put to a vote this week, after the finance panel approved it on December 8. Here's what you should know about the reform of the banking sector:

Why is Indonesia revising its financial legislation?

Existing regulations are convoluted and frequently inconsistent or overlapping. Given the current development in fintech and the central bank's aspirations for a digital rupiah, they are also obsolete.

The government anticipates that the measures will assist strengthen the local capital markets in order to finance the needs of the economy.

It is also consistent with President Joko Widodo's goal of changing legislation to reduce bureaucracy and simplify procedures, particularly so that financial authorities can respond to crises more quickly.

What alterations are ahead for the central bank?

If passed, the bill will give Bank Indonesia the ability to purchase government bonds when the president declares a crisis, legitimizing its unusual action during the pandemic, which the central bank and the finance ministry had previously described as a "one-time" measure.

As part of the plan, MPs want the central bank to "participate in maintaining financial system stability in order to foster sustainable economic growth" in addition to its current mandates of ensuring rupiah and price stability.

An earlier effort to expressly incorporate job creation and economic growth in Bank Indonesia's mandate, which analysts say poses a threat to the institution's independence, has been removed from the most recent measure.

Comments

What Are Spreads and Bid-Offer Spreads?

A spread in trading is the difference between the asking and closing prices for an asset. Since the spread determines the prices of both derivatives, it is a crucial component in CFD trading. Brokers, market makers, and other providers frequently display their prices using spreads. This implies that a purchase of an asset will always cost a little more than the market's base price. While the selling price will always be a little less. In the financial world, spread can refer to a variety of things, but it always refers to the difference between two prices or rates. It is also a type of trading strategy, such as an option spread. This is done by buying and selling the same amount of options with various strike prices and expiration dates. Offer-Bid Spread The spread that is added to the price of an asset is known as the bid-offer spread, which is sometimes referred to as the bid-ask spread. The bid-offer spread reveals the price range at which buyers and sellers are interested in an...

Unlocking the Secrets of the World of Finance

In today's fast-paced global economy, understanding the intricacies of finance is paramount for both individuals and businesses alike. Finance serves as the lifeblood of any economic system, fueling growth and prosperity. Our team at AIPRM Corp is dedicated to providing you with comprehensive insights into the world of finance. In this article, we delve deep into the financial landscape, unraveling its various components and complexities. Navigating the Financial Landscape Finance: A Holistic Perspective Finance encompasses a wide array of financial instruments and institutions, each playing a unique role in the broader financial system. At its core, finance involves the management of money, investments, and assets. Our comprehensive exploration of finance will leave you well-informed, whether you're a seasoned investor or a newcomer to the world of finance. Financial Markets and Instruments The world of finance thrives within a complex web of financial markets and instrument...

South Korean crypto fraud executives jailed

The latest court action puts seven V Global executives behind bars, including the 22-year-old CEO. Six executives involved in the $1.5 billion (2 trillion won) V Global crypto exchange fraud received up to eight years in prison. Three were not detained so they could fight certain charges in court. V Global recruited 50,000 investors between July 2020 and April 2021 by promising 300% returns and referral bonuses. According to a translation of Dec. 26 reports from South Korean media, Mr. Yang and Mr. Oh got eight and three years for defrauding investors. Unnamed executives received 3-year sentences and 5-year probation. Three of the six haven't been detained because they claim innocence and can defend themselves in court. "The defendants only trusted VGlobal's management team, evaded responsibility, and once the investigation began, they destroyed evidence and interfered with it," the judge said. The judge gave the defendants leniency because the amount of fraud and num...

Search This Blog