BI Maintains CCyB Ratio at 0% while OJK Launches Green Taxonomy
The Financial Services Authority of Indonesia (OJK) announced that the financial system has been stable in the fourth quarter of 2021 and that the Bank Indonesia (BI) has decided to maintain the countercyclical capital buffer (CCyB) ratio at 0% and the Macro-prudential Intermediation Ratio (RIM) in the range of 84-94% with a lower limit disincentive parameter of 84% since January 01, 2022. Additionally, the Macro-prudential Liquidity Buffer (PLM) ratio has been set at 6% with the repo flexibility of 6% and the Sharia PLM ratio has been set at 4.5% with repo flexibility of 4.5%. BI will also work toward strengthening the policy of transparency of the basic lending rate (SBDK) as well as the role of micro, small and medium enterprises (MSMEs) in the national economic recovery. OJK also announced that the Indonesian President Joko Widodo launched the green taxonomy of Indonesia at the 2022 Financial Services Industry Annual Meeting.
The green taxonomy, which has been compiled with eight "Ministries," contains a list of classifications of economic activities that support environmental protection efforts and climate change mitigation and adaptation. There are 2,733 sectors and sub-sectors that have been studied while 919 can be mapped to sub-sectors/groups/business activities. Among the 919 subsectors/groups/business activities, 904 are not yet able to be directly categorized as green sector (as there are prerequisites that must be met first) while the other 15 can be included directly in green category. For classification purposes, the criteria are divided into three categories: green (do no significant harm, apply minimum safeguard, provide positive impact to the environment, align with the environmental objective of the taxonomy), yellow (do no significant harm), and red (harmful activities). Additionally, 198 additional subsectors for further development areas were proposed by several "Ministries" and other stakeholders. At the meeting, the OJK Chairman Wimboh Santoso discussed the performance and projected growth in the financial services industry. To achieve the projected growth, OJK has set policy priorities for the year, including to prepare the financial sector for policy normalization in other countries, encourage financing to the commodity and property sectors, develop sustainable financing scheme, and strengthen digital transformation policies in the financial services sector.
Related Links (in Indonesian)
- Press Release on Financial System Stability
- Press Release on Green Taxonomy
- Indonesian Green Taxonomy (in English)
Keywords: Asia Pacific, Indonesia, Banking, Insurance, Securities, CCyB, Regulatory Capital, Macro Prudential Policy, Climate Change Risk, ESG, Policy Priorities, Sustainable Finance, Basel, Sustainable Taxonomy, BI, OJK
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