Bank Indonesia plans to use recap bonds to replace Sertifikat Bank Indonesia (SBI) as instrument moneter. the central bank will do it gradually especially if assets and liability management can be concluded and agreed by finance minister.
The definition of assets and liability management as the conversion of the recapitalization bonds (recap bonds) from non-tradable to tradable notes. following the 1997/1998 Asian financial crisis, Inonesian entity banks received IDR430 trillions liquidity support from goverments by recap bonds.
Assets and liability management will boost supply for Bank Indonesia for monetary operations. At the end of December 2011, the outstanding value of the recap bonds which totaled about IDR 240 trilions. The notes would be converted to tradable bonds so that Bank Indonesia could use recap bonds as instrument for monetary operations.
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