| JAKARTA, March 23
JAKARTA, March 23 Indonesia's central bank on
Thursday issued new regulations for the trading of negotiable
deposit certificates (NCDs) in a bid to get more financial
institutions to tap into the market.
Policymakers want to boost the trading of NCDs to reduce the
tendency of Indonesian banks to park excess funds at the central
Only 5 billion of the 20.25 trillion rupiah ($1.52 billion)
worth of outstanding NCDs were traded, according to the central
bank, as legal uncertainties and a lack of clear regulations
kept financial institutions on the sidelines.
The rules, which will come into effect on July 1, will
regulate the approval process for certificate issuers, product
criteria, transaction and supervision.
"In order to establish the money market, development of
money market instruments that can be transacted is needed,
including the certificates of deposit," Bank Indonesia said in a
The central bank hopes an increase in NCD trading would also
help support monetary policy transmission by improving the
commercial bank rates curve and funding profile.
"BI has an objective of reaching inflation stability by
monetary policy transmissions that go through various channels,"
Nanang Hendarsah, the central bank's head of financial market
development department, told reporters.
The central bank plans to also issue a regulation on
commercial paper transactions in May to provide further depth to
the local financial market, as well as treasury dealer
certification rules next month, Hendarsah said.
"We want market practitioners to have technical
capabilities, to obey the code of conducts, and follow the
rules," he said.
Last year, a central bank deputy governor said that BI
managed about 322 trillion rupiah ($24.17 billion) of banks'
short-term excess liquidity.
($1 = 13,324 rupiah)
(Reporting by Hidayat Setiaji and Fransiska Nangoy; Editing by