Countercyclical Banking Policy as a Public Welfare Effort in Indonesia
Abstract
The high level of economic growth in Indonesia conforms to the development of businesses that increase capital by making credit agreements with financial institutions. The spread of the COVID-19 pandemic case has been designated as a national disaster, having an impact on the implementation of credit agreements between debtors and financial institutions. Economic problems make it difficult for people to perform their obligations. A countercyclical buffer policy is a buffer carried out by providing additional capital to replace losses in the event of excessive credit growth that can disrupt financial stability. Bank Indonesia Policy PBI No. 17/22/PB/2015, Financial Services Authority Regulation Number 11/POJK.03/2020, and Financial Services Authority Regulation Number 14/POJK.05/2020 were issued with the aim of providing welfare as stated in Article 33 of the 1945 Constitution. In this study, the author uses the normative research method. Based on the explanation of several policies issued by the government because of the spread of the current pandemic case, the government must continue implementing countercyclical buffer policies at financial institutions in Indonesia. A countercyclical relationship between the state of the community, namely the capital buffer, and the business cycle can be explained; good economic conditions allow banks to expand by providing much credit to the community. The implementation of these policies is imperative so that Indonesia can ensure financial stability by maintaining the community’s economic growth and paying attention to welfare levels.
Keywords: countercyclical policy, credit agreement, community welfare.
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