Saturday, 8 Jumadil Akhir 1439 / 24 February 2018

Saturday, 8 Jumadil Akhir 1439 / 24 February 2018

BI gives more stimulus relaxing banking liquidity management

Jumat 19 January 2018 03:10 WIB

Red: Reiny Dwinanda

Bank Indonesia

Bank Indonesia

Foto: Republika/Adhi Wicaksono
Bank Indonesia hopes that with the relaxation, banks would have greater room in managing their liquidity.

REPUBLIKA.CO.ID, JAKARTA -- Bank Indonesia has given more stimulus - relaxing banking liquidity management by increasing the portion of average calculation to 2 percent from earlier 1.5 percent for Minimum Reserve Requirement Primary (GWM-P averaging) for rupiah denomination amid the central bank's target to recover credit expansion to 10-12 percent in 2018.

Assistant Governor Head of the Department of Economic and Monetary Policy of Bank Indonesia Dody Budi Waluyo said the portion of average calculation of "GWM-P Averaging" became 2 percent of the total GWM-P, which is 6.5 percent effective as from July 16, 2018. "This is a follow up of reform in monetary policy operation to increase the effectiveness of monetary policy transmission, to support flexibility of bank liquidity management and to speed up the process of deepening financial market," Dody told reporters here on Thursday night.

The ratio of GWM-Primary is the minimum rupiah or foreign exchange deposit of bank in Bank Indonesia giro. With the concept of "GWM-P Averaging", the central bank will calculate the funds of banksthey are required to keep in Bank Indonesia giro on the average per period. The portion , which is calculated on the average is 2 percent of the total GWM-P Averaging of 6.5 percent.

Bank Indonesia hopes that with the relaxation, banks would have greater room in managing their liquidity which will cut their cost of fund and increase acceleration of credit distribution. In 2018, the central bank seems very hopeful that bank intermediacy function would increase sharply in 2018 as there is less risk of non performing loan expected with improvement in macro economy. "Banks, therefore, would have room for better management. This also will help give signals to banking intermediacy," he said.

Dody said banks also could invest their excess in liquidity as a result of the relaxation in bonds thereby contributing brisker financial market.

Apart from rupiah GWM-P, Bank Indonesia also adopts average calculation of "GWM Averaging" 2 percent of third party fund (DPK) of the total GWM-P 8 percent. For independent sharia banks and sharia business units from the total rupiah GWM-P 5 percent of DPK, the portion of GWM Averaging starts with 2 percent of DPK. "Implementation of GWM averaging in foreign exchange of conventional banks and GWM averaging in rupiah sharia banks will start on 1 October 2018," Dody said. 

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