prevention and resolution process in a systematic and integrated way on a national scale, through financial safety net law. financial crisis generally starts with liquidity squeeze in the interbank market, market interest rate hike, and exchange rate pressure. for that reason, we intensify monitoring on financial market transactions, especially to scrutinize vulnerabilities that would lead to financial crisis. through the developed monitoring system, we wish to ensure the adequacy of rupiah and foreign exchange liquidity in the financial market, as well as to maintain exchange rate stability. therefore, we conduct a combination of intervention in the foreign exchange market and acquisition of government securities ( sbn ) in the secondary market. this policy is quite effective in stabilizing the exchange rate and sbn price, while also increase sbn accumulation in bank indonesia for monetary operation purpose ( reverse repo ). in order to maintain the stability of the exchange rate, we also need to seek long - term policy breakthrough by ensuring sustainable supply of foreign exchange. against this background, at end september 2011, we took the initiative to issue a regulation to obligate export proceed and proceed from external debt to be deposited in domestic banking system. this policy can be considered soft compared to those in thailand and malaysia, who has regulated tightly foreign exchange flows related to exports and imports since decades ago. we have been taken hostage for too long by market mechanism, which in fact lead to market imperfection, and we need to correct it. considering the significant role of inflation from the supply side problem, bank indonesia has been in close coordination with the government to preserve price stability, particularly resulting from volatile nature of commodities prices and government ’ s decision on administered prices. bank indonesia has taken steps to increase the role of inflation control teams, both in national and regional levels. additionally, bank indonesia regional representative offices have also routinely published regional economic study which serves as outlets of various aspects of the regional economy. distinguished guests, ladies, and gentlemen, on the banking area, within 2011 bank indonesia has pursued several policies framed by four pillars, namely : bis central bankers ’ speeches a. policy to boost banking intermediation role, to enable more efficient and transparent intermediation, as well as to open access of low - income community to financial services. included in this policy is the policy on transparency of information on primary lending rate and the continuation of financial inclusion program. i put strong attention this strengthening of banking transparency, which is expected to lead up to

##gs, do not end up being out of phase with the cycle, or having an undesirable longer - term impact on the equilibrium of public finances ). these conditions are not easy to stick to in practice. an intermediate possibility, of which professor blanchard is a proponent, is to make any non - automatic fiscal response to very large shocks not fully discretionary, i. e., to have specific measure triggered by pre - defined exceptional circumstances. the idea is not in fact totally new ; it dates back to one of the earliest paper on the subject ( musgrave and miller, 1948 ) : " the flexibility of the tax system might be 1 / 5 bis - central bankers'speeches increased if provision was made for automatic adjustment in tax rates with changes in income but this could hardly be called built - in flexibility in the usual sense of the term ". however, it has been explored more rigorously in recent years ( e. g. eichenbaum, 2019 ; blanchard and summers, 2020 and boushey et al., 2019 ). basically, the idea consists in changing the parameters of fiscal policy ( e. g. the generosity of the unemployment benefit scheme or the tax rates ) for a period of time, when one or more business - cycle indicators ( like the unemployment rate or the output gap ) exceed certain thresholds. this approach reduces the distortions and delays typically implied in fully discretionary measures. one can think of several objections. defining appropriate indicators and thresholds, for instance, may be tricky, both on theoretical and practical grounds. ( professor blanchard discusses certain key details in his joint 2020 paper ). issues of statistical measurement may arise. the possibility of ex - post tampering with duration and parameters may reintroduce some of the problems inherent in pure discretionary action. various potential practical pitfalls will have to be taken into account. still, i understand that an arrangement of this type is actually in place at least in the case the us unemployment benefits scheme. it might be useful to explore the possibility of making use of a similar arrangement in a supranational context, with an open mind and a very pragmatic attitude. fiscal rules fiscal rules in a monetary union are needed to ensure the stability of the area by preventing harmful spillovers caused by public - finance tensions in member states. for this reason, members are required to pursue sound forward - looking fiscal strategies to guarantee long - term sustainability. this will make public finances