Why Indonesia’s Financial Revamp Has Market on Edge: Q&A
- Proposed law would cement central bank’s bond-buying power
- Parliament is set to vote on the bill as soon as this week
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Indonesia is set to enact sweeping changes to its financial sector regulation as soon as this week, after two years of thwarted attempts and market pushback.
The proposed law seeks to expand the central bank mandate and cement its authority to buy government bonds during times of crisis, as it had done in the past three years to shore up Southeast Asia’s largest economy. By the end of 2022, the central bank would have bought 1,144 trillion rupiah ($73 billion) in debt papers. The bill also seeks to bring regulations in step with the rapidly evolving fields of financial technology and cryptocurrency.