New law gives BI monetary financing power during crisis

Law also adds mandate for central bank to support economic growth

Bank Indonesia
Bank Indonesia
Christopher Jeffery

Indonesia’s parliament has passed a law authorising the central bank to directly finance the budget in times of crisis, while expanding its mandate to support economic growth.

The changes are part of a broader revamp of financial sector rules approved by lawmakers in the House of Representatives on December 15. President Joko Widodo is expected to sign the draft legislation into law within 30 days.

Under the bill, Bank Indonesia (BI) is allowed to buy sovereign bonds in the primary market if

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