Related News
Jakarta (ANTARA News) - Bank Indonesia (the central Bank/BI) has set itself the target of withdrawing Rp50 trillion in excess liquidity by raising minimum reserve requirements to 8 percent from 5 percent previously.

"The increase in minimum reserve requirements to 8 percent is a must because of high inflationary pressure in the past couple of months and a rise in inflation expectations," Bank Indonesia Deputy Governor Budi Mulya said in a press conference here on Friday.

Meanwhile, Mulyaman D Hadad, another Bank Indonesia deputy governor, said the total excess liquidity held by banks currently reached more than Rp300 trillion. By withdrawing Rp50 trillion of it there was still room for the banks to extend credits.

On Friday, Bank Indonesia decided to raise primary reserve requirements to 8 percent from 5 percent of third party funds effective November 1 this year.

Bank Indonesia Governor Darmin Nasution said the decision to raise the primary reserve requirements was made by considering potential inflationary pressures in the months ahead while at the same time leaving the benchmark rate unchanged at a level of 6.5 percent.

"The board of governors deems it necessary to raise the primary reserve requirements to 8 percent from 5 percent of third party funds in view of huge excess liquidity in banks," he said.

Banks that could meet the primary reserve requirements of 8 percent would be given remuneration of 2.5 percent a year, he said.

"The combination of the policies is considered enough to maintain the monetary stability and financial system amidst high capital inflows," he said.(*)

Editor: Jafar M Sidik
COPYRIGHT © 2012

Comment
Send Comment