Inflation Control and Financial Facilities Strategy
Principles of Average Reserve Requirement Ratios Improvement
.
•
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.
Monetary policy operational framework reform
started in August 2016 as BI7DRR replaced BI Rate
as policy rate. This was 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
requirement in Rupiah. The
reformulation is also backed by various efforts in
financial market deepening.
reserve
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
Effective
Date
Fixed RR: 5%
Fixed RR: 4.5%
Average RR: 1.5%
RR: 6.5%
Average RR: 2%
RR: 6.5%
16th July
2018
2.5% (from 1.5%
RR)
0%
Fixed RR: 8%
Average RR: 0%
RR: 8%
Fixed RR: 6%
16th July
2018
Average RR: 2%
RR: 8%*
1st
October
2018
Fixed RR: 5%
Average RR: 0%
RR: 5%
Fixed RR: 3%
1st
Average RR: 2%
RR: 5%*
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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