Legacy of Early Crisis and Incomplete Institutional Reforms on the Financial Sector in Indonesia

Muhamad Basri and Reza Siregar

Chapter 20 in Macro-financial Stability Policy in a Globalised World: Lessons from International Experience:Selected Papers from the Asian Monetary Policy Forum 2021 Special Edition and MAS-BIS Conference, 2023, pp 410-430 from World Scientific Publishing Co. Pte. Ltd.

Abstract: The collapse of an economy and the meltdown of its financial system often unveil the weakness of the regulatory and the supervisory institutions and lead to adjustments or even evolution of the functions and responsibilities of the relevant institutions, including the central bank. The COVID-19 pandemic crisis is no exception. The reforms that have taken place following the past crises, especially the 1997 East Asian crisis, have profoundly shaped the modern central bank, the financial supervisory institutions and the coordination among the members of the Financial System Stability Forum (FSSF) in Indonesia. The changes have positively strengthened the country’s financial sector. However, many old questions or debates remain or resurface. Moreover, this study argues that the past reforms and their executions have left lasting impacts undermining the effectiveness of the policies of the relevant institutions today, including the coordination among them.

Keywords: Macro-financial Policy; Policy Framework; Macroprudential Policy; Monetary Policy; Fiscal Policy; Capital Flow Management Measure; Capital Control; Foreign Exchange Intervention; Integrated Policies; Multiple Policies; Policy Trade-off; Policy Substitute; Policy Complement; Policy Interaction; Policy Space; Central Bank; International Spillovers; Spillbacks; Sending Country; Receiving Country; Financial Channel; Financial Regulation; Financial Stability; External Stability; Advanced Economy; Emerging Market Economy; Capital Flow; Portfolio Flow; Banking Flow; Exchange Rate; Banking System; Non-bank Financial Institution; United Kingdom; Sweden; China; Hong Kong Sar; India; Indonesia; Korea; Singapore; Latin America; Croatia (search for similar items in EconPapers)
JEL-codes: E E52 E58 E6 F F01 F3 F38 (search for similar items in EconPapers)
Date: 2023
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