Bank Indonesia’s Macroprudential Policies: A New Era in Financial Stability

YOGJA, RAKYAT NEWS- Bank Indonesia, through Nugroho Joko Prastowo, Director of the Macroprudential Policy Department at Bank Indonesia (BI), emphasized the crucial role of macroprudential policies in bridging the gap between monetary policy and microprudential regulations.

Prastowo explained that macroprudential policies, which have gained prominence since the global financial crisis of 2008-2009, serve as a critical link between macroeconomic and microfinancial strategies.

“This policy has just begun to be known and developed as a lesson from the global financial crisis in 2008-2009. This policy bridges between macro monetary and micro finance,” he said

He noted that while macroprudential policies are relatively new to Indonesia and not widely understood, their introduction was driven by the lessons learned from past financial crises. He pointed out that the 2008 crisis was unique in its microeconomic focus, contrasting with previous macroeconomic crises involving debt, financial systems, and exchange rates.

He highlighted that financial instability, even with stable macroeconomic indicators, can hinder economic growth. When banks are unwilling to lend, economic activities are obstructed, demonstrating the importance of having a policy framework that integrates monetary and microprudential approaches.

Prastowo outlined three main pillars of macroprudential policy: promoting intermediary functions such as credit financing, ensuring financial system resilience to avoid crises, and advancing financial inclusion and green finance.

He cited examples such as the reduction of down payments for vehicle financing to zero percent during the COVID-19 pandemic and adjustments to the Loan-to-Value (LTV) ratio for home loans as part of BI’s efforts to stimulate credit growth (Uki Ruknuddin)