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
Related Articles
EBA Proposes Standards for IRRBB Reporting Under Basel Framework
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
FED Issues Further Details on Pilot Climate Scenario Analysis Exercise
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
