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)