Bank Indonesia (BI) is the central bank of the Republic of Indonesia. Darmin Nasution, formerly the interim governor, is the current governor. The last governor before Darmin Nasution became interim governor, Boediono, resigned when he was selected to run as vice president in the Indonesian presidential election in 2009. Darmin Nasution was sworn in by president Susilo Bambang Yudhoyono on September 1, 2010.
Finance Minister Sri Mulyani Indrawati was proposed as a candidate for governor of BI in 2009. However, the suggestion did not proceed and she later left the cabinet on 5 May 2010 and moved to the World Bank Group as Managing Director.
Bank Indonesia was founded on 1 July 1953 from the nationalization of De Javasche Bank, a Dutch bank dating from colonial times. For the next 15 years, the Bank of Indonesia carried on commercial activities as well as acting as the nation’s bank.
This came to an end with the Law No.13/1968 on the Central Bank, which was subsequently replaced by Law No.23/1999, giving the bank independence.
Thereafter, the bank reported to the parliament (People's Representative Council) instead of the president, and the bank’s governor was no longer a member of the cabinet.
The bank is led by the board of governors, comprising the governor, a senior deputy governor and at between four and seven deputy governors.
The governor and deputy governors serve a five year term, and are eligible for re-election for a maximum of two terms. The governor and senior deputy governor are nominated and appointed by the president, with approval from the People's Representative Council. Deputy governors are nominated by the governor and appointed by the president, with approval of the People's Representative Council. The president has no power to dismiss a member of the board, except when a board member voluntarily resigns, is permanently handicapped, or is proven guilty of criminal offence.
The Board of Governors Meeting is the bank’s highest decision-making forum. It is held at least once a month to decide on general policy on monetary affairs, and at least once a week to evaluate policy implementation or to decide on other strategic and principle policy.
The Bank is active in promoting financial inclusion policy and is a leading member of the Alliance for Financial Inclusion. It hosted AFI's second annual Global Policy Forum (GPF) in Bali, Indonesia in 2010. On May 14, 2012 Bank Indonesia announced it would be making specific commitments to financial inclusion under the Maya Declaration.
Status and Position of Bank Indonesia
A new chapter in the history of Bank Indonesia as an independent central bank was initiated when a new Central Bank Act, the UU No. 23/1999 on Bank Indonesia, was enacted on May 17, 1999 and have which has been amended with UU No.3/2004 on January 15, 2004. The Act confers it the status and position as an independent state institution and freedom from interference by the Government or any other external parties.
As an independent state institution, Bank Indonesia is fully autonomous in formulating and implementing each of its task and authority as stipulated in the Act. External parties are strictly prohibited from interfering with Bank Indonesia's implementation of its tasks, and Bank Indonesia has the duty to refuse or disregard any attempt of interference in any form by any party.
Such unique status and position are necessary so that Bank Indonesia can implement its role and function as monetary authority more effectively and efficiently.
Whether as a public legal entity or as civil legal entity, the position of Bank Indonesia is regulated by the statutes. As a public legal entity, Bank Indonesia has the authority to issue policy rules and regulations, which are binding to the public - at - large. As a civil legal entity, Bank Indonesia is able to represent itself in and outside the court of law.
Objectives and Tasks of Bank Indonesia
In its capacity as central bank, Bank Indonesia has one single objective of achieving and maintaining stability of the Rupiah value. The stability of the value of the Rupiah comprises two aspects, one is stability of Rupiah value against goods and services and the other is the stability of the exchange rate
of the Rupiah against other currencies
. The first aspect is as reflected by the rate of inflation and the second aspect is as reflected by the development of Rupiah exchange rate against other currencies.
The prescribed single objective is intended to establish a target that is clear and to be achieved by Bank Indonesia within its limits and responsibilities. Thus way, the achievement of the objective of Bank Indonesia will be easily measurable.
In the pursuit of the objective, Bank Indonesia is supported by three pillars, representing its three sectors of task:
- Formulating and implementing monetary policy;
- Regulating and ensuring a smooth payment system;
- Regulating and supervising the national banking system.
These three sectors have to be integrated to ensure that the objective of achieving and maintaining a stable value of Rupiah can be achieved effectively and efficiently.
Mission, vision and strategic value of Bank Indonesia
To achieve and maintain rupiah stability by maintaining monetary stability and by promoting financial system stability for Indonesia’s long term sustainable development.
To be recognized, domestically and internationally, as a credible central bank through the strength of our values and achievement of low, stable rates of inflation.
Strategic Values: Competency - Integrity - Transparency - Accountability - Cohesiveness
To realize its Mission, Vision and Strategic Values, Bank Indonesia has stipulated the following medium-long term strategic objectives :
The Board of Governors
- Maintain Monetary Stability;
- Maintain Financial System Stability;
- Maintained a sound and accountable BI internal finance;
- Enhance the Effectiveness and Efficiency of Monetary Management;
- Maintain FSS through (i) effective bank regulation and supervision, financial sector surveillance, and crisis management, and (ii) promote banking inter mediation;
- Maintain a secure, reliable and efficient payment system;
- Improve organizational capability, HR, and information system;
- Strengthen institution by implementation of good governance, effective communication and legal framework;
- Optimize completion and benefits of BI’s Initiatives.
In implementing its duties and responsibilities, Bank Indonesia is managed by the Board of Governors. The Board is led by a Governor who is assisted by a Senior Deputy Governor as the Vice-Governor, and at least four and not more than seven Deputy Governors. The Members of the Board of Governors shall be appointed for a term of office of 5 (five) years and may be reappointed to the same position for no more than 1 (one) subsequent term of office.
The Governor, Senior Deputy Governor and Deputy Governors shall be proposed and appointed by the President with the approval of the House of Representatives. Candidates for Deputy Governor shall be proposed by the President pursuant to a recommendation of the Governor (vied Article 41 Act No.3, year 2004 amendment to Act No.23, year 1999). A member of the Board of Governors may not be dismissed during his or her term of office, unless the person are resigns, convicted of a felony, unable to attend in person for a period of 3 (three) consecutive months without reasonable cause, is declared bankrupt or unable to settle liabilities to creditors, or is permanently incapacitated.
International collaboration undertaken by Bank Indonesia
Bank Indonesia advocates collaboration with international institutions to buttress task performance continuity related to economic, monetary and banking fields. Bank Indonesia currently participates in international collaboration covering the following aspects:
- Joint investment for foreign exchange market stability;
- Settlement of cross-border transactions;
- Correspondent relationships;
- Information exchange on subjects related to the roles and functions of the central bank;
- Training/research in monetary and payment system sectors.
Bank Indonesia’s membership of several international institutions and forums include:
- The South East Asian Central Banks Research and Training Centre (SEACEN Centre);
- The South East Asian, New Zealand and Australia Forum of Banking Supervision (SEANZA);
- The Executive’ Meeting of East Asian and Pacific Central Banks (EMEAP);
- ASEAN Central Bank Forum (ACBF);
- Bank for International Settlements (BIS).
Memberships of Bank Indonesia as a representative of the Indonesian Government include:
- Association of South East Asian Nations (ASEAN)
- ASEAN+3 (ASEAN + China, Japan and Korea)
- Asia Pacific Economic Cooperation (APEC)
- Manila Framework Group (MFG)
- Asia-Europe Meeting (ASEM)
- Islamic Development Bank (IDB)
- International Monetary Fund (IMF)
- World Bank, including membership of International Bank of Reconstruction and Development (IBRD), International Development Association (IDA) and International Finance Cooperation (IFC), as well as Multilateral Investment Guarantee Agency (MIGA)
- World trade Organization (WTO)
- Intergovernmental Group of 20 (G20)
- Intergovernmental Group of 15 (G15, as an observer)
- Intergovernmental Group of 24 (G24, as an observer)
- Currency of Republic of Indonesia:
- Indonesian rupiah
- List of Central Banks:
- Central Banks
- Official website of Bank Indonesia:
- Ministry of Finance:
- Statistics Indonesia:
- Indonesia Investment Coordinating Board: