KEBIJAKAN MONETER

Summary

In this lesson, Bu Dewi Norsanie discusses the concept of monetary policy, explaining its role in managing the money supply and controlling inflation. She introduces key concepts such as expansive and contractive monetary policies, and the instruments used by central banks, such as open market operations, discount rates, and reserve requirements. The video also covers how these policies are applied during inflation and deflation to stabilize the economy and maintain purchasing power. Bu Dewi emphasizes the importance of controlling inflation for the overall well-being and stability of the economy.

Takeaways

• 😀 The lesson focuses on monetary policy and its role in managing the money supply and interest rates to stabilize the economy.
• 😀 Monetary policy helps control inflation and maintain the value of currency to ensure economic stability.
• 😀 There are two types of monetary policy: expansive (loose money) to address recession and contractive (tight money) to combat inflation.
• 😀 The main objective of monetary policy is to maintain balance between the amount of money in circulation and the availability of goods and services.
• 😀 Expansionary monetary policy increases the money supply to stimulate the economy during recessions, while contractionary policy reduces the money supply to control inflation.
• 😀 Instruments of monetary policy include open market operations, discount rates, reserve requirements, and selective credit policies.
• 😀 Open market operations involve the buying and selling of Bank Indonesia certificates to control money supply in the economy.
• 😀 The discount rate affects borrowing costs for banks and is adjusted to either encourage or discourage borrowing depending on inflationary conditions.
• 😀 Reserve requirements refer to the minimum amount of reserves banks must hold, affecting their ability to lend money.
• 😀 Selective credit policy applies criteria such as character, capability, collateral, capital, and conditions (5C) when offering loans, influencing the money supply.
• 😀 In times of inflation, monetary policy aims to tighten the money supply, while during deflation, it aims to loosen it to stimulate demand.
• 😀 Moral suasion and other measures, like currency devaluation or revaluation, can also be used to influence money circulation and stabilize the economy.

Q & A

What is the main focus of monetary policy?

The main focus of monetary policy is to control the amount of money in circulation and regulate interest rates in order to maintain economic stability and prevent inflation or deflation.

What are the four main functions of monetary policy mentioned in the script?

The four main functions of monetary policy are: 1) Maintaining economic stability, 2) Stabilizing prices, 3) Increasing job opportunities, and 4) Improving the balance of trade and payments.

Why is printing excessive amounts of money harmful to an economy?

Printing excessive amounts of money can lead to inflation, causing the prices of goods and services to rise and reducing the purchasing power of the currency, which destabilizes the economy.

What is inflation and how does it relate to monetary policy?

Inflation occurs when the amount of money in circulation is too high, leading to a rise in the prices of goods and services. Monetary policy addresses this by controlling the money supply and interest rates to keep inflation in check.

What is the difference between expansionary and contractionary monetary policy?

Expansionary monetary policy (loose money policy) aims to increase the money supply to stimulate economic growth, typically during periods of recession. Contractionary monetary policy (tight money policy) aims to reduce the money supply to curb inflation during periods of economic overheating.

What is an example of an instrument used in monetary policy?

One example is the Open Market Operations, where the central bank buys or sells government securities in the open market to control the money supply.

What does the term 'discount rate' refer to in monetary policy?

The discount rate refers to the interest rate charged by central banks to commercial banks for borrowing funds. It is a tool used to influence lending and money supply.

How does the central bank control the money supply through reserve requirements?

The central bank can control the money supply by increasing or decreasing the reserve requirements, which is the percentage of deposits that commercial banks must keep on reserve rather than lend out.

What role does 'moral suasion' play in monetary policy?

Moral suasion is a method where the central bank encourages economic actors, such as banks and businesses, to act in ways that align with the central bank's goals for monetary stability, without using direct legal measures.

What is the impact of high inflation on the economy?

High inflation reduces the purchasing power of money, makes goods and services more expensive, and can lead to economic instability, as it becomes harder for people to meet their basic needs.