cihak ( 2010 ) found that the remit for central bank ’ s role in financial stability was weaker than in the case of price stability. 15 the dominant view, however, seems to be that financial stability should be a shared responsibility, as monetary policy instruments of central banks can only have a partial impact on the ultimate objective of financial stability. fourth, do central banks have the instruments to ensure both price stability and financial stability? central banks functioning with a single instrument of short - term interest rate, gali, jordi ( 2011 ), “ monetary policy and rational asset price bubbles ”, barcelona gse working papers series no. 592. subbarao, d. ( 2009 ), “ financial stability : issues and challenges ”, rbi bulletin, october. eichengreen, barry, eswar prasad and raghuram rajan ( 2011 ), “ central banks need a bigger and bolder mandate ”, opinion, brookings institution, october. woodford, michael ( 2012 ), “ inflation targeting and financial stability ’, nber working paper 17967, national bureau of economic research. gokarn, subir ( 2011 ), “ monetary policy considerations after the crisis : practitioners ’ perspectives ”, rbi bulletin, january. svensson, lars e o ( 2010 ), “ monetary policy after the financial crisis ”, speech at the second international journal of central banking ( ijcb ) fall conference, tokyo, september. as in footnote 9. as in footnote 11. bank for international settlements ( 2009 ), issues in the governance of central banks, a report from the central bank governance group, www. bis. org / publ / othp04. htm. cihak, martin ( 2010 ), “ price stability, financial stability, and central bank independence ” 38th economics conference at the oesterreichische nationalbank, vienna. bis central bankers ’ speeches particularly those with inflation targeting framework may not be equipped to achieve multiple objectives following tinbergen ’ s assignment rule. 16 in this context, many have argued that interest rate is too blunt an instrument for dealing with overall financial stability issues ( for example, bernanke, 2011 ). 17 goodhart ( 2008 ) opined that many central banks with only one instrument of monetary policy may find these two objectives often conflicting with each other. 18 in contrast, it is argued that though identifying the bubble is difficult, and therefore a risky strategy, the cleaning up cost after the bubble burst

from 1998 crisis as i just mentioned, indonesia is now structurally different with what was in a decade ago. this is as a result of more than ten years of consolidation and dynamic transition in almost all sectors. the extensive transformation measures became a continuing agenda with full commitment. in the last ten years, we have embarked upon a far - reaching transformation measures, especially in the area of improving our institutional capacity. during this process, the government has taken steps to improve our economic efficiency through policy reform packages covering key areas of concern, such as taxes, customs, legal frameworks, and the financial sector. so to speak, one of the most notable steps are the introduction of open capital account through promulgating law no. 24 of 1999 and increasing the investment flexibility by stipulating investment law no. 25 of 2007 to encourage offshore financing for the economy. the government and bank indonesia, as a central bank, are always committed to consistently undertake fiscal and monetary discipline, as well as strengthening domestic financial market resiliency. learning from the failure of 1998 crises, our policies were focused on enhancing policy transmission, improving financial market efficiency through prudential practices and financial market deepening. the government is also improving their capacity on fiscal budgeting by adopting a better debt and cash management. prudent fiscal policy can partly be observed by gradually reducing the debt to gdp ratio, in particular the foreign debt. the debt to gdp ratio has declined significantly within the last couple of years, from 77 % in 2000 to around 30 % recently. from a monetary policy perspective, bank indonesia has consistently pursued rupiah stability as mandated by the new bank indonesia law that was first introduced in 1999. in practice this has been manifested in an effort to focus on achieving the medium term ( three years ) inflation target set by the government and avoiding excessive exchange rate volatility consistent with the free exchange rate regime adopted since 1998. on this regard, bank indonesia has increased the transparency and clarity of its monetary policy stance by introducing “ the bi rate ” as a policy rate since june 2005. further improvement has also been undertaken in mid of 2008 by translating the bi rate as a short - term money market interest rate target ( known as puab overnight target ). thus, puab overnight has been used as an operational target in executing the monetary policy decision through bank indonesia ’ s domestic market operation. the main reason behind this enhancement is based on two reasons. first, the increasingly importance of agents ’ expectation in forming inflation along with the