Indonesia has initiated a bullion banking system to stabilize its foreign exchange and integrate gold into formal finance. Officially launched by two state-owned entities, this project aims to handle the country’s gold production domestically and provide safe custody for gold owned by citizens. The initiative is expected to strengthen monetary stability and increase public trust in financial institutions.
Indonesia has introduced a bullion banking system, aiming to stabilize foreign exchange by integrating gold into the formal financial framework. This initiative, led by the government, will initially be provided by two state-owned entities: PT Bank Syariah Indonesia and PT Pegadaian, the latter being a subsidiary of PT Bank Rakyat Indonesia. Officials indicated that additional licenses for bullion services may be granted in the future.
The project is a strategic move to capitalize on Indonesia’s status as the largest regional gold producer. President Prabowo Subianto emphasized that the initiative targets monetary stability, stating that one of its objectives is to utilize gold processed and stored domestically. The government expects to attract a part of the 1,800 tons of privately held gold by offering secure storage and related financial services.
Moreover, this initiative is crucial because gold is traditionally viewed as a safe asset in Indonesia. Minister of State-Owned Enterprises Erick Thohir expressed a desire for citizens to have confidence in the formal financial system, while Senior Minister Airlangga Hartarto highlighted gold and the US dollar as key safe-haven assets during crises.
Globally, bullion banking is primarily operated by a few key players, including JPMorgan and HSBC, which are involved in facilitating gold transactions, particularly through platforms like the London Precious Metals Clearing Limited, responsible for settling London’s gold trades.
The establishment of bullion banking in Indonesia marks a significant policy shift aimed at enhancing monetary stability and integrating gold into the formal financial sector. This initiative is expected to save foreign exchange by harnessing gold resources domestically. With two initial state-backed institutions offering these services, the government hopes to build public trust in formal financial mechanisms, which could lead to more licenses and services in the future.
Original Source: news.bitcoin.com
