VIVAnews - Anticipating the global crisis that may disturb the national financial and economic system, Indonesia's central bank, Bank Indonesia, improves the provisions of liquidity facilities for public banks.
In a written statement 19 November 2008, Bank Indonesia explained that the perfected provisions include Intraday Liquidity Facility for public banks (FLI), Short-term Funding Facility for public banks (FPJP) and Emergency Funding Facility for public banks (FPD).
The issued regulation also completes the Financial System Safety Net (JPSK) as mandated in the Governmental Regulation in Lieu of Law (Perppu) No.4/2008 on JPSK. Governor of Bank Indonesia, Boediono, said that "The provisions are part of the financial system safety net needed to stabilize the financial system."
He went on to say that the framework of the comprehensive financial system safety net clearly states the role of each related institution as well as the coordination mechanism, both interms of crisis prevention and solving. It is important to maintain the monetary stability to support the economic growth.
Intraday Liquidity Facility (FLI) is revised through Bank Indonesia Regulation No.10/29/PBI/2008 governing funding facility to handle liquidity shortcoming due to a disparity between cash inflow and cash outflow. The facility is aimed at expediting payment which is supported by invaluable liquid collateral.
Short-term Funding Facility (FPJP) is improved through Bank Indonesia Regulation (PBI) No.10/26/PBI/2008 and PBI No.10/30/PBI/2008, which grants wider access to banking to acquire fund with longer term than it is through FLI.
Meanwhile, Emergency Funding Facility (FPD), revised through PBI No.10/31/PBI/2008, is given to banks having bad liquidity yet still meeting certain solvability level that Bank Indonesia sets.
"Compared to FLI and FPJP, FPD granting should be based on decision by the Committee for Stabilizing Financial System (KSSK) whose members include the Finance Minister and Governor of Bank Indonesia," said Boediono.
Translated by: Bonardo Maulana W
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