UNAIR economist explains how to maintain financial system stability in Indonesia

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Illustration by Feri Fenoria

UNAIR NEWS – “Macroprudential Policy needs to be in synergy with microprudential policy in maintaining financial system stability (SSK) in order to be healthier, to anticipate various economic shocks or global crises that occur unexpectedly in the future,” stated Lina Nugraha Rani, S.E., M.SEI.

It was a statement on the results of Lina’s research on ” Most Important Macropudential Indicators in Financial System Stability in Indonesia”. According to her, in maintaining financial stability, Indonesia used two indicators for measuring financial system stability, microprudential and macroprudential.

“Macroprudential indicators include economic growth, balance of payments, inflation rates, interest rates and exchange rates, contagion effects of crisis, as well as other factors,” she explained.

Therefore, she continued, it is necessary to see which macro prudential indicators are most important in measuring financial system stability from the perspective of financial and banking practitioners. After doing that, she asserted that the government is expected to be able to find out what are the main indicators of financial stability from the reality faced.

“As well as getting the right recommendations to be offered within the framework of financial system stability,” she explained.

Furthermore, she also explained that based on the results of interviews with banking experts or practitioners who were analyzed using ANP, three most important indicators of financial system stability in macroprudential aspects were identified. The three indicators, she explained, were debt, macroeconomics, and balance of payments.

“Based on the results of interviews and data analysis, current debt has a strong relationship to maintaining financial system stability in Indonesia,” she said.

In the end, she also explained that paying the debt due soon would be enough to help to maintain financial stability in Indonesia. Debt decision making and payment strategies must be regulated in such a way as not to disturb the stability of the financial system in Indonesia.

“This is more relevant to the theory of third generation financial crises which states that interdependence among countries can contribute to the crisis when a country unable to pay foreign debts,” she concluded.

Author: Nuri Hermawan

Editor: Khefti Al Mawalia

This article is written based on scientific journal paper available at: https://jurnalekonomi.lipi.go.id/JEP  atau  https://jurnalekonomi.lipi.go.id/JEP/article/view/254 

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