Overnight Instruments to be Applied in Second Half of the Year
Thursday, 22 February, 2007 | 15:39 WIB

TEMPO Interactive, Jakarta: Bank Indonesia (BI) has stated that the plan to issue overnight short-term monetary instruments will be implemented by the second half of this year.

BI Governor Burhanuddin Abdullah said that the central bank needed a transition period of three months.

“We are expecting that by the second half (of the year) this will be started,” said Burhanuddin yesterday (02/21) in Jakarta.

According to him, discussions regarding the plan will only be conducted at the end of this week.

He explained that BI wanted to use benchmark monetary instruments that other countries apply.

Up until today, the central bank has only applied the interest rate of Bank Indonesia Certificates (SBIs) as a reference.

“This is despite the fact that this was still too rigid,” he said.

BI is also seeking other possibilities in implementing monetary operations.

One of these will be issuing longer- and shorter-term SBIs.

According to Burhanuddin, longer-term SBIs will ease the central bank in creating a better yield curve.

Deputy Managing Director of PT Bank Danamon Indonesia Jerry Ng has positively welcomed BI’s plan of Bank Indonesia to expand its range of monetary instrumentd.

According to him, banking investment will increase and be more varied.

“The more instruments available, the better,” said Jerry.
He pointed out that the expansion of monetary instruments must be in line with the market mechanism.

AGOENG WIJAYA