2022 State Budget: Fiscal Policy and Structural Reform
Principles of Average Reserve Requirement Ratios Improvement
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Considerations for the Average Reserve Requirement Ratios
Improvement
Improvement in average reserve requirement is a follow up
to the monetary policy operational framework reform
implemented by Bank Indonesia since 2016.
was
Monetary policy operational framework reform started in
August 2016 as BI7DRR replaced BI Rate as policy rate. This
then strengthened in 1st July 2017, by the
implementation of the average reserve requirement in
rupiah for conventional commercial banks at 1.5% out of the
total 6.5% of GDP reserve requirement in Rupiah. The
reformulation is also backed by various efforts in financial
market deepening.
The current improvement aims to elevate flexibility in
banking liquidity management, enhance banking
intermediation function, and support efforts in financial
market deepening. This multiple targets will in turn improve
the effectiveness of monetary policy transmission in
maintaining economic stability.
Substance
a. Additional rupiah
average reserve
requirement for
conventional
commercial banks
b. Annulment of
demand deposit
renumeration
c. Implementation of
foreign exchange
average reserve
requirement for
conventional
commercial banks
d. Implementation of
average reserve
requirement for
Islamic banks
Old
New
Fixed RR: 5%
Fixed RR: 4.5%
Average RR: 1.5%
RR: 6.5%
Average RR: 2%
RR: 6.5%
2.5% (from 1.5% RR)
0%
Fixed RR: 8%
Average RR: 0%
RR: 8%
Fixed RR: 6%
Average RR: 2%
RR: 8%*
Fixed RR: 5%
Average RR: 0%
RR: 5%
Fixed RR: 3%
Average RR: 2%
RR: 5%*
Effective
Date
16th July
2018
16th July
2018
1st October
2018
1st October
2018
* Complemented by harmonisation feature to align with the average reserve requirement in rupiah
feature for conventional commercial banks (e.g. Calculation period, lag period, and Maintenance
period of 2 weeks)
Source: Bank Indonesia
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