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
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
JFSA to Set Up Subcommittee on ESG Data IssuesRelated Articles
OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks
The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.