##udent liquidity management. concentration risk whether it be in advances or in funding sources is something that we should be mindful of. large exposures to a single counterparty or a group of counterparties turning bad can have detrimental consequences. therefore, the frenzy of some of the ucbs to acquire large corporate exposures which are beyond their bite size, is to be strictly avoided and there is a need to closely monitor the existing ones. it is essential to ensure that there are well documented board approved policies for important aspects such as identification of target segments and business sectors, acceptable concentration levels, product specific guidelines such as borrower loan eligibility criteria, etc. risk managers should try to see that these policies are in 2 / 4 bis - central bankers'speeches alignment with the risk that the bank can bear i. e. its risk tolerance. for instance, a lossmaking bank with high npas should not be giving high risk loans and instead be focussing on recovery efforts. the other aspect i would like to highlight is the meticulous monitoring of risk limits. frequent breaches in risk limits, coupled with their non - ratification or their routine ratification, poses substantial dangers to the stability and integrity of financial institutions that extend beyond the immediate financial implications. if breaches become normalized or overlooked, employees may perceive risk limits as mere guidelines rather than non - negotiable boundaries, thereby compromising the institution's overall risk awareness. therefore, it is imperative to address breaches systematically, conduct thorough investigations, hold staff accountable, and implement corrective measures to fortify the risk management practices. compliance next in line is the role of compliance. compliance should adopt a forward - looking approach to anticipate and prevent non - compliant activities. rather than reacting to issues after they arise, compliance should strive to identify and address potential compliance risks before they escalate. the compliance function should adopt a'regulation - plus'approach, going beyond mere adherence to the letter of regulatory requirements and instead ensure that the spirit and intent of the regulation is also addressed. internal audit once appropriate policies and strong internal controls are in place, it is for internal audit to independently verify compliance with the same. very often we come across deficiencies in the scoping, coverage, and periodicity as well as issues in independence of the internal audit function. proper scoping should ensure that risks are comprehensively covered. further, high - risk areas may necessitate more frequent audits, while lower - risk areas may

remind all of us that it will take more than just a solid program. credibility can only be built if we can develop a credible program and at the same time be consistently and strictly adhere to it. bank indonesia has been working closely with the government in developing our own economic program to replace the program currently stated in the imf letter of intent. with the support from all of us, we are confident that we can and we will be able to obediently and consistently implement the program. for monetary policy, we are in the process of preparing the new framework of monetary policy, i. e., inflation targeting framework. this framework provides clarity in our objective and consistency in our monetary policy to pursue price stability, thereby gradually improve credibility. in banking sector, to maintain financial system stability and improve governance in banking sector, bank indonesia is currently in the process of preparing indonesia ’ s banking architecture ( api ) that can be used as a comprehensive and forward - looking platform for banking policy. the indonesian banking architecture vision is to create a sound, strong and efficient banking system to preserve financial system stability and stimulate national economic development. the new architecture consists of six pillars, as follow : • a sound domestic banking structure with the capacity to meet public needs and to stimulate sustainable national economic development. • a strong banking industry that is highly competitive and has a solid core capable of absorbing shocks. • good corporate governance as means to strengthen banks ’ internal condition • effective banking supervision and regulations, consistent with the international standards. • a complete infrastructure in supporting sound banking industry, including preparation for more sophisticated technology in line with a more sophisticated financial transaction. • consumer protection and empowerment. ladies and gentlemen, before closing my remarks, let me figure out the outlook of our economy. looking forward to 2004, we will continue to strengthen our macroeconomic fundamentals to be the basis for stronger growth in 2004 onward. while monetary policy will remain prudent, as both the inflation rate and the risk premium decline, fiscal policy will stay focused on achieving sustainability. this will require further steps to increase revenue collection and improve access to financing. but as the recovery continues we can begin to look forward to strategic investments to improve the welfare of the people and support the development of the economy. good macroeconomic management, however, is not enough to sustain high rates of economic growth. high growth requires structural reforms to make the economy more efficient. such reform programs that the government is undertaking include the strengthening of legal infrastructure, improving governance and increasing transparency in