Indonesia‘s government plans to revamp the financial regulatory structure in a move that will include the central bank taking on the additional tasks of managing economic growth and employment, CNBC Indonesia reported on Wednesday, citing a minister.
The plan to put macro and micro monitoring of the financial system under one command aimed to close a gap between the authority of the central bank, which issues macroprudential regulations for the banking industry, and the Financial Services Authority (OJK), Airlangga Hartarto, coordinating minister for economic affairs, said in an interview with CNBC Indonesia.
OJK is currently the ‘micro’ regulator in charge of supervising and regulating the whole financial industry.
Hartarto also said Bank Indonesia (BI) will be given the tasks of maintaining the quality of economic growth and employment, on top of its current mandate to manage the value of the rupiah through inflation and exchange rate management.
“Those four functions must be … considered by the central bank,” Hartarto said.
Susiwijono Moegiarso, secretary to the ministry of economic affairs, declined to comment on the CNBC report. Hartarto did not immediately respond to a request for comment.
Reuters reported in July that President Joko Widodo was considering issuing an emergency decree to return banking regulation, currently under the supervision of OJK, to the central bank’s remit, according to sources. One of the sources said BI would be given the task of looking after unemployment.
BI Governor Perry Warjiyo has repeatedly said the central bank’s current policy focus is supporting economic recovery, having cut interest rates four times this year in response to the coronavirus pandemic and bought a large number of government bonds.
OJK has eased rules for loan restructuring and issued several incentives to keep the financial system stable.