Bank Indonesia Regulates Macro-Prudential Financial System

Bank Indonesia (“BI”) recently issued Regulation No. 16/11/PBI/2014 on Macro-prudential Control and Supervision (“2014 Regulation”).

The 2014 Regulation sets out procedures for BI to take regulatory and supervisory measures in preventing systematic financial risks (“systemic risks”)[1] arising. Such measures are referred to as “macro- prudential” policy, in contrast to “micro-prudential” policy which are measures to enhance the safety and soundness of financial institutions and consumer protection. Since 31 December 2013, the Financial Services Authority (OJK) has authority over micro-prudential matters.[2]