Bank Indonesia Discusses Financial Digitization with East Asia's Central Banks

TEMPO.CO, Jakarta - Bank Indonesia or BI, together with the central banks of countries in the East Asia and Pacific region, held a meeting on August 29-30, 2024, in Bali. The forum, part of the Executives' Meetings of East Asia-Pacific Central Banks (EMEAP), addressed the challenges currently facing the financial sector, as well as the implications of digitalization.

The central bank’s deputy governor Juda Agung outlined the key topics addressed during the discussion, which included financial digitalization and green financial transition, developments in financial principles and cybersecurity.

"The cooperation aims to promote synergy in efforts to maintain financial system stability, policy innovation, and strengthening banking sector supervisory practices," Juda said in a written release on Monday, Sept. 2.

Indonesia's central bank was selected to chair EMEAP for the period 2024-2026 in recognition of its performance in maintaining the stability of the country's financial system and its pioneering contributions to policy innovation, particularly in the area of banking supervision.

Juda underscored that the global financial system has undergone profound transformations. The rapid progress of digitalization and the green financial transition, have influenced the banking business model, he noted, offering significant potentials. But on the other hand, such developments might create vulnerabilities that could impact the financial system’s stability.

"These developments necessitate the adaptation of policy responses and supervisory practices that are both appropriate and effective," he stated.

In terms of the digitalization aspects of the financial sector, he posited that regulators must facilitate innovation while maintaining risk management, including those risks associated with cybersecurity.

With regard to the transition to a greener financial system, he added that regulators must initiate the process within the financial sector. This may be achieved through collaboration with the industrial sector, the promotion of sustainable disclosure and reporting, the provision of data, and the reinforcement of inter-authority synergies.

The 56th Executives' Meetings of East Asia-Pacific Central Banks meeting yielded a number of significant initiatives across three domains: sustainable finance, macroprudential policies, and banking recovery efforts.

ILONA ESTHERINA

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