JAKARTA – The financial and banking sector in Indonesia is deemed only slightly related to the current banking issues in the United States of America (USA). Nevertheless, the domestic banking capitalization rate is considered relatively high in order to manage liquidity risks.

Quoted from Kontan today (13/3), Andri Asmoro, Head of Economists of Bank Mandiri, claimed that Indonesian banking regulators will quickly act to mitigate any impacts of risks in the current volatility in the global financial market. “The banking in Indonesia is relatively strong in the face of liquidity risks,” he added.

According to Asmoro, the bankruptcy of SVB may hit three aspects in its run. The spillover may be felt by financial sectors, start-ups in US and Indonesia, and it even may affect the volatility of currency exchange rate and bonds market.

Out of those three aspects, Indonesian financial sector only has slight relation to those problematic banks in the US.

The US financial authorities has reportedly dissolved Sillicon Valley Bank (SVB) and Signature Bank last week, on March 10 and March 12, due to inadequate capital. Thus, Federal Deposit Insurance Corporation (FDIC) took over SVB and Signature Bank, while still ensuring access to its users.

The dissolution of both banks has raised a commotion in the US financial sector since the last dissolution of Lehman Brothers in 2008, 15 years ago. (LK/ZH)