Indonesia Fuels Worries With Plans to Cut Central Bank Autonomy
- Lawmakers seek to expand BI’s mandate, create monetary council
- Central bank is already buying bonds to finance fiscal deficit
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Bank Indonesia’s independence is coming under threat with proposals from lawmakers to give the government greater sway over monetary policy.
A draft bill -- which was prepared by a panel of experts and will now be discussed by various parliamentary committees -- recommends several sweeping changes to the 1999 Central Bank Act: widening the central bank’s mandate to include supporting economic growth and jobs; creating a new monetary council led by the finance minister to coordinate policy with the government; and adding ministers to the bank’s interest rate-setting board.