As ASEAN chair this year, Indonesia is promoting a macroeconomic policy mix for maintaining economic stability in the region, according to the Director of Bank Indonesia’s (BI’s) International Department, Iss Savitri Hafid.
“The policy mix was discussed a lot and also used as material in seminars during Indonesia’s ASEAN chairmanship,” she noted here on Friday.
The macroeconomic policy mix focuses on utilizing several policy instruments to maintain the region’s macroeconomic stability, while still supporting ongoing economic recovery, she added.
“Monetary authorities can use various policy instruments to maintain financial sector stability and economic growth momentum,” she said.
With the policy mix, she explained, monetary authorities will not have to depend on one policy instrument, namely interest rate, rather, they could also utilize other instruments, such as foreign exchange rate interventions, macroprudential policies, and capital flow management.
“It (policy mix) is one of the agendas that we discussed a lot. We even encourage it not only be discussed in ASEAN, but we try to involve the IMF (International Monetary Fund) and the Bank for International Settlements to put the policy mix in their perspective,” she said.
In addition, Indonesia, as ASEAN chair, is encouraging the expansion of ASEAN’s local currency transaction (LCT) network to support trade and investment, cross-border payments, and financial asset substitutability.
Meanwhile, ASEAN leaders have agreed on the importance of promoting the use of LCT in the region.
ASEAN Finance Ministers and Central Bank Governors (AFMGM) have agreed to form a task force to promote local currency transactions (LCT) and adopt high-level principles for developing the ASEAN LCT Framework.
Furthermore, ASEAN has agreed to expand regional payment connectivity (RPC) and strengthen digital financial inclusion and literacy in the region.
“In the next three to four years, it is expected that all ASEAN countries will have signed an MoU to connect their payment system,” Hafid said.