Document Type
Case Study
Case Series
Ad hoc Emergency Liquidity Programs
Abstract
By the autumn of 2008, the effects of the Global Financial Crisis of 2007–2009 had struck Indonesia, as liquidity in interbank markets dried up, capital flows reversed, and economic growth slowed. On October 30, 2008, Bank Indonesia—the central bank of Indonesia—passed Regulation No. 10/26/PBI/2008, establishing a Short-Term Funding Facility for Commercial Banks (SFF). On October 31, 2008, the capital adequacy ratio of Bank Century, a relatively small Indonesian bank, was –3.35%. On November 14, 2008, after Bank Century failed to conduct payment clearing the day before, Bank Indonesia approved Bank Century for access to the SFF and began disbursements of funds, which reached a total of 689.4 billion Indonesian rupiah (IDR; USD 57.1 million) by November 18. Bank Indonesia provided the SFF loan against collateral for an initial term of 14 days (extended to 90 days, the legal maximum) at an interest rate of the Bank Indonesia Rate plus 100 basis points. On Friday, November 21, 2008, the Financial System Stability Committee—a committee composed of the minister of finance and the governor of Bank Indonesia—declared Bank Century to be a failing bank with a systemic impact, and the Deposit Insurance Corporation took over operations of Bank Century. On February 11, 2009, the DIC paid off all SFF obligations of Bank Century to Bank Indonesia.
Recommended Citation
Arnold, Vincient
(2025)
"Indonesia: Bank Century Emergency Liquidity Program,"
Journal of Financial Crises: Vol. 7
:
Iss. 1, 230-259.
Available at:
https://elischolar.library.yale.edu/journal-of-financial-crises/vol7/iss1/10
Date Revised
2025-04-15
Included in
Banking and Finance Law Commons, Economic History Commons, Finance Commons, Finance and Financial Management Commons, Law and Economics Commons, Policy Design, Analysis, and Evaluation Commons, Public Administration Commons