more negative. the most recent uk ’ s decision to leave the european union adds another complication to the already bleak global economic outlook. moreover, brexit, which some said has produced a seismic political shock, has shifted the nature of global concerns from heightened vulnerabilities towards a new era of political uncertainty. the previous episode of heightened vulnerabilities were characterized by rising risk of weakening growth, unresolved legacy issues in banks from advanced economies, leveraged and increasingly fragile corporates from emerging markets, and the existence of systemic liquidity. all of these urgently require more balanced and potent policy mix. bis central bankers ’ speeches now, in the new era of political uncertainty, there seems to a strong link between political uncertainty and market confidence. a political shock results in economic and financial fallout, and has tremendous financial stability implication. therefore, in this new episode, apart from addressing vulnerability, we need also to strengthen the foundations of global financial system. otherwise, there is a likelihood that we will be trapped in a vicious circle, in a way that the policy uncertainty undermining confidence will instill slower and stagnant growth, which will erode political cohesion, making the crisis legacy challenges harder to resolve, which will later induce further increase in policy uncertainty. such new dynamics and concerns have given rise to a new set of policy challenges, not only on how to simultaneously maintain stability and revive growth, but also on how to strengthen the foundations of global financial system. against this backdrop, bank indonesia and the federal reserve bank of new york have decided to co - host a seminar that will look deeper and expand the boundaries of thinking, nurturing, and offering new insights pertaining to these challenges, with the spirit of putting both east and west perspectives on the table. in our opinion, the boundaries would encapsulate three areas. first, pursuing growth objectives after the crisis, where factors impeding the global economy will be discussed, and initiatives to balance structural reform and support for growth will be deliberated. topics surrounding challenges that are unique to small open economies, along with strategies to achieve sustained economic growth, hopefully will make this seminar very relevant and interesting. second, monetary policy tradeoffs in the open economy, where challenges stemming from divergent monetary policies, linkages between economic and financial cycles, dealing with capital flow reversal risks, and new roles of exchange rate in external adjustment, will be discussed. third, achieving financial stability in periods of monetary policy divergence, in which

in its many facets. the situation truly explains many countries ’ challenges including indonesia. in this regard, bank indonesia cannot solely rely on the policy rate as a single monetary policy instrument. in fact, we employ a variety of policy instruments which we call “ the policy mix. ” the “ policy mix ” consists of ( a ) policy rate to anchor inflation expectation complemented by ( b ) exchange rate flexibility to lessen pressure on external sector, ( c ) capital flows management to mitigate short - term excessive volatility, ( d ) macroprudential measures to manage procyclicality, and ( e ) we also continue to strengthen policy coordination with the government and ensure good communication to the public. this year the policy mix focuses on maintaining macroeconomic and financial system stability, while stimulating economic momentum. in the monetary sector, gradual monetary easing remains consistent with efforts to maintain macroeconomic and financial system stability. such policy is supported by measures to maintain exchange rates in line with economic fundamental, strengthen the position of reserve assets and manage flows of foreign capital. bank indonesia also maintains accommodative macroprudential policy, while continuing the effort of financial market deepening. in terms of macroprudential policy, bank indonesia has been implementing a number of regulations, namely, the loan to deposits ratio ( ldr ) linked to the reserves requirement ( rr ) and loan - to - value ( ltv ) ratio on property loans and automotive loans. we adjust the rate according to the need of real sector. distinguished guests, ladies and gentlemen, in the midst of continuing global challenges, bank indonesia always strives to advance its central banking practices, particularly its policy frameworks. in order to improve the effectiveness of monetary policy transmission, bank indonesia has reformulated the policy rate from the bi rate into the 7 - day ( reverse ) repo rate, which will become effective on august 19, 2016. such enhancement does not imply a change in the prevailing monetary policy stance. during the transition period prior to august 19, 2016, the bi rate remains as bank indonesia ’ s policy rate. within that timeframe, bi has started to announce bi 7 - day repo rate as part of the term structure. the enhancement of monetary operation framework has three objectives. first, to improve the policy signaling of policy rate as primary reference for interest rates in the financial market. second, to strengthen the effectiveness of monetary policy transmission through its stronger impact on short term money market rates and bank rates