Economists and bankers have warmly welcomed a new Bank Indonesia (BI) regulation that lays the groundwork for the establishment of derivatives clearing bodies, or central counterparties (CCPs), in the country, saying such institutions could mitigate transaction risks.
Meanwhile, the central bank said the CCPs would be part of the infrastructure to deepen the financial market.
A CCP is a clearing agency intended to bring regulatory oversight to over-the-counter (OTC) derivative transactions, which — because they were largely unregulated before the 2008 global financial crisis — are deemed one of the causes of the crisis.
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