Can an Emerging Market Become a Policy Pioneer?
The world’s biggest central banks are usually the ones to break old models. Now Indonesia is charting a course for others to follow.
De facto head of investor relations.
Photographer: Kiyoshi Ota/BloombergEven by the dramatic standards of economic stimulus in the age of coronavirus, Indonesia stands out.
Jakarta is unabashedly monetizing state debt — an idea once considered heretical in polite circles because of concerns it would stoke inflation, weaken the currency and erode central-bank independence. But this concept has been slowly making its way toward the light. The central bank said Tuesday it will purchase 574.4 trillion rupiah ($40 billion) in bonds from the government, most of it directly through private placements. The experiment is laudable, and a measure of how far things have come globally that it isn’t condemned. It could even show the way for other emerging markets.