effective they have been. * * * for some years, major central banks have been intervening in fixed income markets with the intention of providing substantial amounts of stimulus to their respective economies and delivering on their mandates. their interventions ultimately rest on the same premise : when the overnight money market rate typically used by central banks as a policy instrument reaches a level that cannot be further reduced to any meaningful extent, the natural progression is to extend 1 / 5 bis central bankers'speeches the maturity range of interest rates that the central bank seeks to influence. this can be done in two ways, which strongly complement each other. first, by influencing expectations of short - term interest rates via signalling channels, and second, by central bank purchases of long - dated securities which crowd out private demand for such instruments, making them more expensive and thereby encouraging portfolio rebalancing. both instruments have the same purpose – exerting downward pressure on long - term yields. this is why they complement each other and rely on one another to be effective. asset purchases almost certainly enhance the credibility of a central bank ’ s signals that it will follow a certain course of action for setting policy rates in the future, as these purchases are a concrete demonstration of a desire to provide additional stimulus. so, the anchoring of rate expectations is reinforced by asset purchases. and, conversely, the net stimulus provided by asset purchases through compression of the term premia depends, in part, on expectations of how policymakers will adjust short - term interest rates in the future in response to the stronger real activity and inflation sparked by lower term premia. if short - term interest rate expectations are not well anchored throughout the life of the asset purchase programme and are allowed to creep upwards, then the entire exercise to ease financial conditions becomes self - defeating. this is why anchoring interest rate expectations is a key condition for asset purchases to deliver accommodative monetary policy. from this perspective, the ecb has been very effective in designing and implementing its programme. as demonstrated by the overnight index swap forward rate curve, once we launched our monetary policy package in mid - 2014, the short - to - medium segment of the curve, which arguably reflects investors ’ rate expectations most clearly, shifted down and became flatter ( see chart 1 ). this reaction is especially striking when compared to the us experience during the period in which the federal reserve carried out its large - scale asset purchases. one reason why interest rate expectations have been well - anchored in the euro area is

##h as a lawful means of payment in any payment transactions is a very fundamental element and serves as a pillar of successful and robust national economy. in the long run, the mandatory use of rupiah may also prevent the increasingly spreading dollarization in our economy, which in turn will support a more sound economic structure. ladies and gentlemen, 16. bank indonesia realizes that enforcement of mandatory use of rupiah will not be easy. therefore, bank indonesia and the government will cooperate with the law enforcement and state institutions and also collaborate with the private sector. 17. in this regard, we have also cooperated and agreed with the indonesian airline ticketing association ( astindo ) and the indonesian hotel and restaurant association ( phri ) to uphold the mandatory use of rupiah within the republic of indonesia in any transactions related to the business fields of the two associations. 18. we also consider that law enforcement efforts must be balanced with an intense dissemination and education to the community. such community awareness is the first line of defence we must consistently embed to the whole community. only in that way will rupiah become ” host ” in its own country. bis central bankers ’ speeches ladies and gentlemen, 19. we expect that the series of dissemination on mandatory use of rupiah will strengthen our commitment to realize the sovereignty of rupiah within the republic of indonesia and support to achieve stability of rupiah exchange rate. 20. to conclude, may god will always accompany, guide, and facilitate our steps towards a better future. thank you. bis central bankers ’ speeches