Indonesia's Financial System and Global Structural Shifts

This technical report discusses the implications of global financial structural shifts on Indonesia's economy. It outlines how the global financial system has transformed since the Great Financial Crisis, with a notable shift from traditional bank-based models to market-based finance, including the rise of non-bank financial intermediaries (NBFIs). The report assesses the impact of these changes on Indonesia's international investment position, gross capital flows, and domestic financial conditions. It highlights that while Indonesia's exposure to global financial conditions has increased moderately, the influence of NBFIs and cryptoassets remains limited. The report details how Indonesia's financial system continues to be characterized by conventional capital flows, particularly foreign direct investment and portfolio investment, which are vital for its economic stability. Furthermore, it discusses the resilience of domestic financial conditions, supported by robust macroeconomic fundamentals and a coordinated policy mix, despite global financial stress episodes.