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Financial System Stability Committee Assessment for COVID-19 Situation: Need Extraordinary and Unconventional Policy Responses

Jakarta, 01/04/2020 Ministry of Finance - Financial System Stability Committee (KSSK) consisting of the Ministry of Finance, Bank Indonesia, the Financial Services Authority (OJK) and Indonesia Deposit Insurance Corporation (LPS) anticipate COVID-19 risk from the economic side especially in the financial markets because this causes tremendous volatility.

This was conveyed by Minister of Finance Sri Mulyani Indrawati in her presentation themed "Steps to Strengthen Social Protection and Economic Stimulus Facing the COVID-19 Impact" in a Joint Press Conference by Coordinating Minister for the Economy Airlangga Hartarto, BI Governor Perry Warjiyo, Chairman of the Board of Commissioners of the Financial Services Authority Wimboh Santoso and Chairman of the Board of Commissioners of Indonesia Deposit Insurance Corporation Halim Alamsyah via video conference on Wednesday (01/04) in Jakarta.

Minister of Finance stated that the KSSK assessment of the COVID-19 situation had to increase responses. Thus, various unconventional steps need to be prepared to respond to the negative impact of COVID-19 which occurred not under normal circumstances.

"Extraordinary time required extraordinary policy and action. Therefore, it requires extraordinary actions and policies which would not be carried out in a normal situation," she added.

In this situation, various countries have launched extraordinary policy packages which are a combination of monetary fiscal and relaxation in the financial sector.

This illustrates that this crisis is a global crisis which then led to emerging countries not only affected in terms of exports but also capital outflows and shocks in the financial sector.

Therefore, Indonesia needs to focus its attention on three things, firstly health as a humanitarian problem, secondly securing the condition of the lowest population with the Social Safety Net (JPS) and thirdly protecting the business sector so that they can survive and maintain financial sector stability.

"We have to, in Indonesia, focus on three things, first, health and humanitarian issues must be addressed. Second, to guarantee the condition of the community, the social safety net, especially to the lowest society and how we can protect as much as possible of economic business sector so that they do not suffer from damage or can survive in difficult situations and in this case we also protect the stability of the financial sector, the condition of society, economic conditions don't hit and trigger a crisis in the financial sector that threatens financial sector stability," concluded the Minister. (ip/hpy/nr)