Finance Minister Sri Mulyani Indrawati said that many SBN were issued with medium to long tenors, such as six to 10 years. As monetary operations require tenors of one, three, six, and nine months, the government will gradually issue those instruments based on BI's request

"We will work with BI for instruments with shorter terms, lower cost, and more frequent. We will prepare with BI so the transition (from SBI to SBN) will be smooth," she said at the Indonesia Stock Exchange (IDX) building in Jakarta on Wednesday.

BI governor Agus Martowardojo said the new policy would be effective in 2017.

The central bank also has around Rp 100 trillion (US$7.42 billion) SBN for longer-term monetary operations, however, only 50 percent of that number being utilized as short-term operations were more dominant.

Moreover, he added, as SBN can be owned by institutions other than banks, the availability of shorter-term SBN would boost the transactions in the money market and create financial deepening. SBI are exclusively traded between BI and banks.

"With a bigger portion of SBN, banks will have bigger participation in the money market," he said. (evi)

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