##piah suddenly blew up the rupiah value of banks ’ liabilities denominated in foreign currencies and put the banks with short position is serious problems ; ½ the economic crisis put banks ’ customers ( debtors ) in problems which depressed the value of banks ’ assets ; and ½ the tight monetary policy to stabilize the exchange rates, and the resulting high interest rates resulted in negative spreads for the banks. those effects further resulted in many other negative impact on the banks as well as on the economy at large, such as the unwillingness of banks overseas to accept l / c issued by indonesian banks, credit crunch resulted from the low capital base, etc. and such declining trend in the banking sector reinforced the trend in the real sector, and vise versa. 4. efforts to remedy the crisis of confidence on banks : long term ; undoubtedly, this would have to be dealt with by adopting some measures to improve the confidence, both from within the country and from offshore. and, the comprehensive policy package covering economic and non - economic areas was designed for that purpose. however, the recovery of confidence cannot be obtained overnight. it takes time and continues efforts. in the meantime, the economy would have to bear the cost., among other things the high interest rates and / or instability in exchange rates. in this regards, in the short run, we do have a choice, i. e. either to aim at a stronger and more stable exchange rate while bearing the cost of higher interest rate, or aiming at lower interest rate while bearing the cost of weak and unstable exchange rate. short - term ( emergency ) : the government provides guarantees to all depositors and creditors of locally incorporated banks. this is designed to stabilize the situation so that an orderly work - out of the banking system problems can be carried out. this measure enables banks suffering form lack of liquidity due to massive withdrawals to get liquidity support form the central bank as the lender of the last resort. 5. on the low ( mostly negative ) capital base. quite logically, something has to be done. the banks would not be able to do much, to say the least, without anything being done to help recover their capital base. therefore a re - capitalization program has been introduced, whereby the government is willing to subscribe to up to 80 percent of the additional capital needs of viable bank. this is likely be a very expensive exercise, although in a longer run there is a chance that the money invested

ronald waas : “ implementation of use of bi - rtgs system in money settlements for transactions in the capital market ” speech by mr ronald waas, deputy governor of bank indonesia, at an event entitled “ dissemination of mandatory use of rupiah within the republic of indonesia ”, bank indonesia, jakarta, 15 june 2015. * * * distinguished : • heads of banks in indonesia ; • chairs or representatives of banking associations or organizations in indonesia ; • heads of departments of bank indonesia ; • ladies and gentlemen. good morning and may god bless us all 1. to begin our event this morning, i would like to invite all of us to praise god the almighty for giving us the opportunity to meet in this favorable occasion titled “ dissemination of mandatory use of rupiah within the republic of indonesia ”. 2. today, we invite you to have a discussion to establish the same perception and improve our understanding on banking, as well as disseminate and educate on the implementation of mandatory use of rupiah within the republic of indonesia. we are aware that the enforcement of the regulation on mandatory use of rupiah within the republic of indonesia ( bi regulation no. 17 / 3 / pbi / 2015 dated 31 march 2015 and bi circular no. 17 / 11 / dksp / 2015 dated 1 june 2015 ) is of significant importance for today ’ s attendees and the community. the reason is the use of rupiah closely relates to economic activities in general, primarily payment transactions in indonesia. ladies and gentlemen, 3. i consider the awareness of mandatory use of rupiah within the republic of indonesia is based on three significant main dimensions and determines our identity as a nation. 4. first, legal dimension. this is not a new regulation enforced by bank indonesia. since 2011, we already have a currency law, regulating rupiah as one of the symbols of state sovereignty which must be respected and honored by all indonesian people. the establishment of bank indonesia regulation related thereon is expected to promote strengthening and purifying payment transactions within the republic of indonesia by the use of rupiah. 5. various other regulations have been established, such as law on the flow of foreign exchange, law on special economic zones, presidential regulation on the blueprint of national logistics system development, regulation of minister of trade on inclusion of prices and tariffs of goods and services, and many other relevant regulations on rupiah, all of which provide a very strong foundation for the use of rupiah