The central bank is currently studying an option to apply a bond stabilization fund to calm volatile bond markets and guard against capital outflows, a central bank official said Friday.
BI director for monetary policy research Perry Warjiyo said that the central bank would discuss this option with the government in a meeting scheduled soon, as coordination will be needed to apply the bond stabilization fund.
“When massive foreign funds flow into government bonds, so of those sold will be allocated to the bond stabilization fund so if the reverse happens they can be used as a back up,” Perry told reporters in Jakarta.
A bond stabilization fund is applied in South Korea, where in case of a reversal, authorities can buy back bonds to stabilize them in a bid to calm volatile bond markets. (est)
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