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Appreciate the Minister of Finance’s Efforts to Keep Indonesian Banking Safe, But Must Remain Vigilant

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 Jakarta – The closure of Silicon Valley Bank (SVB) is not expected to have a direct impact on Indonesian banking.

Chairman of the Bank Indonesia Supervision Agency, Muhammad Edhie Purnawan, assessed that banking in Indonesia was relatively safe because the link between bank closures in America and Indonesia was not high.

“Banks in Indonesia are relatively safe because the link between the bankruptcy of the three banks in America and Indonesia is not high. What needs to be considered is the companies being financed, especially start-ups that are linked to big banks in Europe or America. Banks in Indonesia don’t need to worry about that,” he said in a dialogue on Kompas TV, Saturday (18/03/2023).

Furthermore, Edhie explained that there was a decline in inflation because America carried out a tight monetary policy.

“So what is happening to the global economy and what should be a common concern, what Jay Powell is doing looks aggressive, causing central banks to become increasingly hawkish to control the inflation they will experience in 2022 and early 2023,” he continued.

Edhie appealed to the public to fully trust the government, especially the Ministry of Finance, that Indonesian banking is still safe.

“We all have to fully believe in the statement of the Minister of Finance, that there will not be a relatively large impact on the incident at American banks,” he concluded.

Meanwhile, Dean of the Faculty of Economics and Business, University of Indonesia, Dr. Teguh Dartanto said, the financial sector in Indonesia is far more prudent than before. According to him, there are two influential factors, namely good policy and good luck.

“There are two influential factors, namely good policy and good luck. Indonesia can properly control issues related to finance and policies in the real sector are quite controlled,” he said.

Interestingly, continued Teguh, there is coordination from the fiscal sector, the monetary sector, and the financial sector. This means that there is good coordination between the Ministry of Finance, Bank Indonesia, OJK and LPS. Experience during the last pandemic can be a lesson, so that Indonesia is sufficiently prepared to face global conditions where there is a possibility that there will be a domino effect.

The Dean of the Faculty of Economics and Business, University of Indonesia, is of the opinion that the domino effect of bank closures in America is still there, although not as big as it was feared. He also appreciated the government for remaining vigilant about the current global economic conditions.

“I really appreciate that the President, as the head of state, has issued an ‘alert’ warning. That is, we believe that Indonesia is “immune” and relatively unaffected, but we also shouldn’t be overbearing. On the other hand, the Minister of Finance with his data and analysis also shows that Indonesia is safe,” he said.

According to him, the direct impact of the American bank closure incident on Indonesia may not occur, but the possibility of an indirect impact is always there.

“This is what we need to monitor constantly, and what the government must do at this time is to remain vigilant,” he said.

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