Central Bank Of Indonesi Indonesia

In Figure 2 it is evident that Indonesia’s cost of living, as reflected by the CPI, has been significantly deteriorating over the last 8 years. Although research argues that CPI may not be an effective indicator of the cost of living for a developing country such as Indonesia (East Asia, 2015). In contrast measuring the percentage of a household budget that goes to food is could be a good indicator. Since 2000, the percentage of household budget spent on food has declined, meaning higher expenditure on discretionary goods and services. This indicates that Indonesia’s urban regions are getting richer faster than the impression expressed with the CPI (East Asia, 2015). This is also reflected in figure 1, as the significant increase of mobile phone subscriptions is a good proxy of increased living standards as a mobile phone is a discretionary living cost. This is a result of the Indonesian growth rate earning a higher level of surplus income to spend on more luxury items.

However, during a period of global recession the Government’s implementation of expansionary fiscal and monetary policy saw taxation revenue fall and government spending increase, sending the budget into deficit by -$32.9 billion in 2008-09 . The 2009-2010 Budget continued expansionary policy to support economic growth and slow the rise in unemployment. The falling inflation rate of 1.5% in 2008-09 , meant it no longer played dominant role in policy making decisions. The tradeoff between inflation and unemployment can be observed in Figure 3.5 .

There are two separate ways that the economy can be regulated; the two options are fiscal and monetary policy. Both of these policies main goal is to get the economy to be in economic equilibrium. Economic Equilibrium is a condition or state in which economic forces are completely balanced and allows for optimal use of the economy. Then we are faced with the question of if the economy in in an inflationary gap or a recessionary gap. This paper is going to be based primarily around the actions the government should take to get our economy out of the recessionary gap and put it back into equilibrium. A recessionary gap occurs when the level of Real Gross Domestic Product is currently lower then it is at full-employment, which puts downward pressure on prices. This is when it comes time to decide on what actions we want to take, whether they are monetary or fiscal.

Economic system is a system of beliefs (concerning work, property and wealth), activities (extractions, production and distribution), organizations(business firms, labour unions), and relationships(ownership, management) that provide the goods and services consumed by the members of a society.(Cullen 2011, p.81) The economic system is unique in that Indonesia has a market-based economy in which the government plays a significant role. There are 141 state-owned enterprises, and the government administers prices on several basic goods, including fuel, rice, and electricity. Growth rebounded in 2010 to 6.1% and is forecast to have reached 6.2%-6.5% in 2011. Poverty and unemployment have also declined despite the global financial crisis, with the poverty rate falling to 12,5% (March 2011) from 13.3% a year earlier and the unemployment rate falling to 6.6% (February 2011) from 6.8% a year earlier. In December 2011, Fitch Ratings upgraded Indonesia’s sovereign debt rating to investment grade. . There are many potential infrastructure projects in multiple sectors including hydroelectric and solar power, palm oil, new roads including toll motorways, mining, expansion of broadband internet, and

Indonesia complained of their lack of autonomy In regions such as Maluku or other areas of Eastern Indonesia, “a low capacity for generating local revenue restricted the ability to adapt projects and development to local conditions” (Bertrand, 198).). The scanty amounts of funds were unable to support the poor and other problems. Bertrand states, “Faced with the New Order regime introduced mild reforms that were designed to address some technical issues while avoiding political decentralization” (Bertrand, 198). In 1995 the Minister of Home Affairs selected 26 districts were used to evaluate the measures designed to increase autonomy. They noticed an increase in Indonesia budget, but they still failed to support the poor, which resulted in

The Federal Reserve is the central bank of the United States, its structure combines centralization with regional authority: including a Board of Governors in Washington D.C., a Federal Government Agency, and twelve regional Reserve Banks. One branch in particular, the Federal Open Market Committee, made of twelve Federal officials, is committed to fulfilling its ordinance from congress to promote maximum employment, maintain stable prices, and moderate long-term interest rates. According to the Federal Reserve System online, “The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system.” In order to do this, the Fed meets every six weeks to consider changes in interest rates, and may have an unscheduled meeting at any time in between. The Fed’s responsibilities rest in four categories: monetary policy, financial intermediation through emergency liquidity (as the lender of last resort), supervision of certain types of banks and other financial firms, and establishment of payment system services to financial firms and the government. The primary method of monetary policy is through open market operations and involves the purchase of existing U.S Treasury securities. Through this type of purchase, the Fed increases the reserve base and thereby facilitates the ability of depository institutions, banks, to make loans and expand money and or credit. The Fed traditionally conducts these open

This essay seeks to explain what are monetary and fiscal policy and their roles and contribution to the economy. This includes the role of the government in regulating the economical performance of a country. It also explains the different features and tools of monetary and fiscal policy and their performance when applied to the third world countries with a huge informal sector.

In order to reach these objectives, the Bank needed to have a strong internal structure. The head of this group is a Governor who represents and controls the Bank. Following the Governor are two deputy governors who assist the governor and administer the Bank’s business. The rest of the Policy Board is comprised of six other members. Below the Policy Board we have Auditors, Executive Directors, and a few Counselors who aid the Governor and Deputy Governors at operating and administering the Bank (“Organization Chart”). Each Governor, Deputy Governor, and Executive Director is in charge of one or several of the fifteen head offices (日本銀行). Lastly we have various offices that do various things for the Bank of Japan. First of all, there are 32 branches that operate “currency issues and banking operations” and they also research on specific “economic and financial situations in their respective areas” (“Organization Chart”). After that Japan has 14 local offices that “handle some of the operations of the Head Office or branches” (“Organization Chart”). Finally, there are 7 Overseas Representative Offices that “perform liaison functions, gather information and conduct research” (“Organization Chart”).

After the Asian Financial Crisis Indonesia continued its rapid economic growth, averaging 5.5% growth each year and consequently has significantly reduced poverty and unemployment. From 2006 to 2007 Indonesia 's population living in poverty declined from 17.8% to 16.6% and in 2012 the unemployment rate within Indonesia diminished to an all time low of 6%. Consequently Indonesia can be classified as an emerging economy. An emerging economy refers to countries that are in the process of industrialisation and are experiencing sustained high levels of economic growth.

The two financial institutions that will be compared and contrast are the European Central (ECB), and the central bank of Jamaica, the Bank of Jamaica (BOJ). Being a native of Jamaica, I will start off with some background information on the BOJ. The Bank of Jamaica, established by the Bank of Jamaica Law (1960), began operations in May 1961. The establishment of the Central Bank was in recognition of the need for an appropriately regulated financial structure to encourage the development process, particularly as Jamaica was about to embark on the road to political independence. The main objectives of the Central Bank were defined by the Bank of Jamaica Act to be:

The central bank’s liabilities are also seen in three different forms which are: currency, government deposit accounts, and deposit accounts of the commercial bank. These can also be divided into different groups based on their purpose. The currency and government deposit accounts allow the central bank to perform its role as the government’s bank. Currency is used in daily transaction everywhere, and since it circulates in the hands of the nonbanking public, it is the principal liability of most central banks. Government accounts are used as a place to deposit the income and used to pay for the things they buy, it is nearly similar to what people need a deposit account for. The central bank provides the government an account to deposit their funds, and they can shift their funds between accounts at commercial banks and the Federal Reserve. Lastly, is the commercial accounts and contains two parts: one is the deposits at the central bank and the cash in the bank’s own vault. The bank can withdrawal funds from the central bank, and the commercial bank can wire portions of a deposit accounts

The economic crisis is a situation when country’s GDP tends to decline, Unemployment increases, the rate of inflation rises faster than it should etc. All these factors combined bring short-run instability in an economy. All of these elements play a major role in creating economic issues in a country (Trading Economics, 2016). Generally, every country has their own rules and regulations to control all these economic factors. If the rate of inflation increases excessively then it gradually increases the level of unemployment by creating an economic recession (Leijonhufvud, 2000). A country suffering from economic recession can be considered that it suffering from worst phase amongst all other economic issues.

The nature and structure of central bank ownership is of interest because of the actual or perceived level of political influence it may afford the government over the conduct of monetary policy. Central banks in many countries are state-owned institutions and operate under legislation similar to that of other government bodies.

MONETARY POLICY IN 2002 (Updated and revised as of July 2002) August 2002 CENTRAL BANK OF TURKEY 1 Outline of Presentation Monetary Policy Framework – Exchange Rate Regime Monetary Policy Strategies Assumptions, Communication – Accountability, Transparency, Interest Rates Policies, Monetary Targets, Inflation Targeting Current Situation and Expectations in Economy Stability Indicators, Price Stability and Growth, Balance of Payments, Monetary Targets Price Developments January – June developments, price movements in the future Outlook for Exchange Rate Policy Outlok for TL Policy 2 Monetary Policy Framework Exchange Rate Regime Characteristics of the 2000 Monetary Policy and Exchange Rate Regime

Therefore, it can be said that several aspects in Indonesia’s PSC, including cost recovery and profit oil split, provide risk-sharing in a fiscal system. However, other factor such as the income-tax rate, which has a fix-rate levy, is not in line with an optimal system.