PERAN BANK INDONESIA DALAM MENGHADAPI KRISIS EKONOMI

Abstract

The goal of Bank Indonesia is to achieve and maintain the stability of the rupiah. This goal is
stipulated in article 7 of Act No. 3 of 2004 concerning Bank Indonesia. Rupiah stability is defined,
among others, as stability of prices for goods and services reflected in inflation. To achieve this goal,
Bank Indonesia decided in 2005 to adopt the inflation targeting framework, in which inflation is the
primary monetary policy objective, while adhering to the free floating exchange rate system.
Exchange rate stability plays a crucial role in achieving price and financial system stability. For this
reason, Bank Indonesia also operates an exchange rate policy designed to minimise excessive rate
volatility, rather than to peg the exchange rate to a particular level.
To carry this out, Bank Indonesia holds powers to conduct monetary policy through the
establishment of monetary targets (such as money supply or interest rates) with the primary goal of
keeping inflation at the government-prescribed level. On the operational level, these monetary
objectives rely on the use of instruments, including open market operations on the rupiah and forex
money markets, setting the discount rate, prescribing a minimum reserve requirement and regulating