[JAKARTA] Indonesia's financial authorities are finalising several measures to encourage transactions of promissory notes and other money market derivatives between banks to deepen the country's financial market, the central bank governor said on Friday.
Governor Agus Martowardojo said the authorities, including Bank Indonesia, the Financial Services Authority (OJK) and the finance ministry, will issue regulations to boost interbank trade of promissory notes with one-, three-, six- and 12-month tenures.
Although current rules allow lenders to use promissory notes, banks stopped trading them and other derivatives in the money market after the Asian financial crisis in 1997-98, he said.
The authorities are now finalising regulations to ensure that promissory notes that banks can take would be based on either loans with underlying collateral or trade transactions, which would reduce default risks, he said.
"We cannot kill a (money market) instrument because of our past trauma. The financial business is a business of trust. If companies didn't pay promissory notes then, it doesn't mean companies wouldn't pay now," he told reporters after a coordination meeting with the finance minister on Friday.
Mr Martowardojo also said the finance ministry agreed to issue more treasury bills with maturities of less than one-year to encourage larger money market trading.
The government currently auctions conventional bonds and sharia bonds once a week, which often include short-term treasury bill offerings.