Bank Indonesia to introduce benchmark interest rates
Bank Indonesia to introduce benchmark interest rates
JAKARTA (JP): Bank Indonesia will soon introduce benchmark
interest rates to meet the need for more reliable reference rates
in the country, says an executive of the central bank.
Herinowo, Bank Indonesia's director of money market
activities, said yesterday that the benchmark rates, to be called
Jakarta Interbank Offered Rates (JIBOR), will be introduced
within the next two months.
He said the new rates will replace the three different
benchmark rates at present, one of which is provided by Bank
Indonesia and the other two by Reuters and Dow Jones Telerate.
"However, the operation of the three versions is a bit
confusing as they are often quite different from one another," he
said following the launching of the Parallel Information Bond
System (PIBS) at the office of the Indonesian Parallel Bourse.
In order to resolve the problem and to provide more reliable
and representative benchmark rates, Bank Indonesia and the two
foreign institutions agreed recently to standardize the three
different benchmark rates.
"We hope to introduce the new JIBOR rates in the next two
months," he said. The JIBOR rates will be based on the average
rates offered by around 25 major banks and will be supplied to
the central bank's electronic Money Market Information System.
The newly-launched PIBS, the first electronic bond monitoring
and trading system in the country, is also connected to the sub-
system of the central bank's money market information system.
Tito Sulistio, the president of the Indonesian Parallel
Bourse, said that the launching of PIBS is expected to revitalize
dormant bond trading in the parallel bourse.
The need for the introduction of the electronic bond
monitoring and trading system has been acutely felt for some
time, especially among securities traders dealing in the
secondary bond market in Indonesia.
Prior to the PIBS operation, instant information on the
quality of a particular bond on offer on the secondary market was
almost non-existent. (hen)