Bank Indonesia Withholds Liquidity Incentives for Banks with High Securities Ratio

Bank Indonesia (BI) has decided against providing further macroprudential liquidity incentives for the money market deepening program to banks that maintain a securities ratio to funding exceeding 19 percent. This policy targets financial institutions with a significant portion of their funding tied up in securities.

The central bank's move aims to manage liquidity within the banking system and encourage banks to actively participate in deepening the money market. By withholding additional incentives, BI signals a preference for banks that manage their liquidity more conservatively or engage more actively in interbank transactions rather than solely relying on securities.

This decision underscores BI's ongoing efforts to refine monetary policy tools and ensure financial system stability. The focus on the securities ratio suggests a desire to monitor and potentially influence how banks allocate their assets and manage their funding structures.