The President has submitted a presidential letter regarding the\nnomination of the Bank Indonesia Governor to the DPR, numbered R-37\ndated 10 August 2026. In the letter, President Prabowo Subianto proposed\none name for the position of Bank Indonesia Governor, namely Destry\nDamayanti, one name for Senior Deputy Governor, namely Aida S. Budiman,\nand two names for Deputy Governor, namely Solikin M. Juhro and M. Anwar\nBashori.<\/p>\n
The DPR will conduct a fit and proper test on 26-27 August 2026.\nBecause the President only proposed one name for each position and the\ncurrent political configuration in the DPR provides majority support to\nthe government, the room for choice in the process is relatively\nlimited. However, institutionally, approval remains part of the DPR\u2019s\nfit and proper test process.<\/p>\n
While waiting for that process, we can reflect on the resignation of\nthe Bank Indonesia Governor on Monday, 27 July 2026. This phenomenon is\ninteresting because after the resignation of the Bank Indonesia\nGovernor, the Jakarta Composite Index (IHSG) fell by 10.65 points, or\n0.17 percent, to 6,185.78. At the same time, the rupiah also weakened\nagainst the US dollar to Rp18,009, down 46 points or 0.26 percent\ncompared with the previous close. The Bank Indonesia JISDOR rate also\nweakened to around Rp17,995 per US dollar. The rupiah\u2019s depreciation\neven continued in the following trading session.<\/p>\n
This is interesting: both markets moved in the same direction. The\nstock market weakened, while the foreign exchange market also put\npressure on the rupiah. This response shows that the resignation of a\ncentral bank governor is not read merely as an administrative change,\nbut also as information about a possible change in the direction of\nmonetary policy and the level of certainty going forward.<\/p>\n
The market is actually conveying a message far more important than\nthe rise or fall of these two economic indicators. The message is that\nIndonesia\u2019s problem is not solely the weakening of the IHSG and the\nexchange rate, nor the change at the top of the central bank. What needs\nto be observed is the extent to which market confidence still attaches\nto a particular figure. When an official changes suddenly, the market\nimmediately questions who the replacement is, what their leadership\ncharacter is like, and whether the policies that have been trusted so\nfar will continue.<\/p>\n
Some observers do link the weakening of the IHSG and the rupiah to\nthe central bank governor\u2019s resignation. That explanation is reasonable,\nbut it does not mean that all market movements can be explained by a\nsingle event. At the same time, the market is also facing global\nuncertainty, expectations regarding the Federal Reserve\u2019s interest rate\npolicy, and geopolitical risks. Therefore, the Bank Indonesia Governor\u2019s\nresignation is more appropriately viewed as one factor that amplifies\nmarket sensitivity to existing risks.<\/p>\n
This is where the issue becomes more interesting. If the market only\nread economic fundamentals, a change of official should not\nautomatically alter the assessment of all financial assets. A strong\ninstitution should be able to provide policy continuity even when the\nfigure leading it changes. But when a change of figure immediately adds\na risk premium, it means the market is not only assessing policy. The\nmarket is also assessing who is trusted to implement that policy.<\/p>\n
The market has its own way of responding to and reading risk. Equity\ninvestors buy expectations of future profits. When uncertainty rises,\nthey tend to reduce risk through selling. Meanwhile, the foreign\nexchange market is more sensitive to a combination of monetary policy\ncredibility, capital flows, external conditions, and perceptions of\neconomic stability. Therefore, the weakening of the rupiah together with\nthe IHSG correction can be read as a signal that uncertainty is not only\noccurring on the trading floor but is also spreading to perceptions of\nmacroeconomic stability.<\/p>\n
This phenomenon reminds us that financial markets are not a single\nspace moving in unison with identical mechanisms. The stock market, bond\nmarket, and foreign exchange market have different assessment\nmechanisms. In international macroeconomics, the three are indeed\ninterconnected, but they do not always provide the same response to an\nevent. Therefore, when several markets move together after a political\nor institutional shock, we need to investigate more deeply. Is the\nmarket anticipating a fundamental change, or is it raising the risk\npremium because of leadership uncertainty?<\/p>\n
It is in this context that the planned fit and proper test for Bank\nIndonesia Board of Governors candidates becomes important. Public\nattention should not stop at the question of who will occupy the Bank\nIndonesia Governor\u2019s seat. That question is important, but it is not the\nmost decisive. What is far more important is whether, after the\nleadership change, the market still believes that Indonesia\u2019s monetary\npolicy will run within a consistent, credible, and independent\nframework.<\/p>\n
The candidate\u2019s name does matter. Track record, competence,\nexperience, and understanding of financial markets will certainly be\nconsiderations for investors. However, if market stability depends too\nheavily on an individual\u2019s reputation, then every change of official\nwill always create new room for speculation. Countries with mature\ninstitutions do not allow policy credibility to change every time their\nofficials change.<\/p>\n
This is where the biggest homework lies for the government and Bank\nIndonesia. Economic stability cannot be sufficiently maintained through\nmarket intervention or large foreign exchange reserves. Stability must\nalso be built through consistent communication, transparent governance,\nand a predictable succession process. The market always appreciates\ncertainty, even when that certainty is\u2026<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/institutionalising-bank-indonesia-1787565114", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }