Bank Indonesia`s (BI`s) Head of the Monetary Management Department Nanang Hendarsah noted here on Tuesday that INDONIA, to be launched in the last week of July, will serve as a reference showing overnight real-time transactions and the liquidity condition in the Interbank Financial Market.
"In future, for the overnight period, we will only refer to INDONIA," he emphasized.
After being effectively applied, the INDONIA rate will be announced everyday by BI at 7 p.m. local time, indicating average transactions in the Interbank Financial Market in a day, from 8 a.m. to 6 p.m. Western Indonesia Time.
"INDONIA is like a beautiful girl, who will be a new benchmark for the overnight reference rate," Hendarsah remarked.
Following the launch of INDONIA, BI will not immediately revoke JIBOR`s overnight term, as some transition is required to effectively apply the new instrument.
"We should wait for the overnight index to be formed first," he noted.
BI claims that INDONIA is one of the best practical financial market systems applied by other nations` central banks, for instance, the United Kingdom that had been using the Sterling Overnight Index Average, or SONIA, since 1997.
When separately interviewed, BI`s Deputy Governor Erwin Rijanto noted that INDONIA will show the rate index based on the market`s transactions, which will avoid it from being driven by some particular banks. In other words, INDONIA will be based on real transactions instead of some bank`s quotation.
"The banks will have a real reference that is not being driven either by small or large, state-owned or foreign banks, but truly based on real transaction," he noted.
Earlier, BI`s Governor Perry Warjiyo had stated that INDONIA was created in a bid to maintain attractiveness of the financial market and to lure global investors to Indonesia.
reported by Indra Arief Pribadi
translated/edited by Azi
(T.A060/A/KR-BSR/A014) 24-07-2018 16:28:11
Reporter: Antara
Editor: Fardah Assegaf
Copyright © ANTARA 2018
