##interrupted cash and non - cash payment system. in terms of the non - cash payment system, bank indonesia tireless strives towards a less cash society ( lcs ), namely encouraging the general public towards a proclivity for non - cash payment instruments. to that end, bank indonesia recently launched a national non - cash movement in order to expedite the proliferation of non - cash transactions. 16. payment ( retail ) transactions in indonesia are currently dominated by cash - based transactions. weak public understanding concerning the existence and use of non - cash payment methods, coupled with limited quality infrastructure, forces the public to favour cash - based transactions for their daily activity. 17. a survey conducted by mckinsey & company ( 2013 ) revealed that in comparison to its peer countries, the use of cash for retail transactions in indonesia remains dominant at 99. 4 %. the dominant use of cash is a consequence of risk and rupiah management costs. statistics show that each year the amount of currency in circulation grows by around 15 %, far exceeding population growth at around 2 – 3 % and gdp growth of around 5 – 6 %. a less cash society is expected to precipitate bis central bankers ’ speeches more balanced growth with more widespread use of non - cash payment instruments amongst the public. 18. the national non - cash movement is critical to hasten the realisation of a more efficient economy as well as better governance in terms of financial management amongst the public, business players and government institutions. to ensure a more effective programme, the national non - cash movement is run in synergy with various ministerial and provincial government programmes through the application of e - government and e - payment. ladies and gentlemen ; 19. a key determinant of a less cash society is a sense of security for all stakeholders when conducting non - cash transactions, in particular protection from criminality by unauthorised parties. this was confirmed by a bank indonesia survey, which found that security when conducting non - cash transactions is the main factor cited by the general public, followed by convenience and interoperability amongst financial service providers. 20. in order to combat potential criminality, the intensive handling of suspected crimes is paramount. solid coordination and consolidation between the relevant authorities and law enforcement is expected to prevent and minimise various payment system and currency exchange crimes. furthermore, the imposition of stringent sanctions will act as a deterrent to potential criminals. 21. sound coordination and cooperation is required in the

agus d w martowardojo : strengthening financial system stability amidst global and domestic challenges keynote speech by mr agus d w martowardojo, governor of bank indonesia, at the discussion and launching of the financial stability study book, jakarta, 8 may 2015. * * * the honorable : former governors of bank indonesia, members of the board of governors of bank indonesia, heads of state ministries and institutions, members of bank indonesia supervisory board, representatives associations, representatives of research institutes, observers, and academicians, heads of national banks, speakers and moderators, distinguished invitees and ladies and gentlemen, of businesses, industrial associations, and banking assalamu ’ alaikum warahmatullahi wabarakatuh, good morning and may god bless us all, 1. first of all, let us praise god the almighty for all blessings so that we are given the opportunity and good health to attend this event. insya allah, we will follow a discussion themed “ strengthening financial system stability amidst global and domestic challenges ” and launching of financial stability study book no. 24, march 2015. 2. this fss book reflects the dynamics in the second semester of 2014 and is a part of bank indonesia ’ s routine publications to meet transparency and accountability of implementation of bank indonesia ’ s duties in macroprudential field. 3. in general, the book ’ s contents are the results of bank indonesia ’ s monitoring and analysis of the development and dynamics covering our financial system. this includes description of assessment of potential risks and financial imbalance in financial institutions, financial markets, financial infrastructures, and corporations as well as households. 4. we expect such monitoring and analysis results may help the community and other stakeholders understand macroprudential policies adopted by bank indonesia to maintain and sustain financial system stability. distinguished ladies and gentlemen, 5. we just left 2014, a year full of challenges for indonesia ’ s economy. many events to tell on how indonesia ’ s economy must face unfavorable global economic dynamics and domestic situations. bis central bankers ’ speeches 6. on the global level, we witness that global economic recovery is ongoing, but at an unexpected and unequal speed. such dynamics transforming into global pressure become more apparent when world ’ s commodity prices keep decreasing due to weak global demand, primarily from china. the emerging markets are then influenced and may potentially suffer from rapid capital reversal, including indonesia. 7. within the country, we also observe equally enormous pressures against the economy. domestic