Indonesia's financial regulations will be overhauled. Here's an example

After two years of futile attempts and market pushback, Indonesia will alter its financial sector legislation this week.

The new bill aims to broaden the central bank's scope and strengthen its authority to buy government bonds during crises, as it has in the previous three years to bolster Southeast Asia's largest economy. By 2022, the central bank will have bought $73 billion in debt. The law aims to update financial technology and cryptocurrency legislation.

The bill was passed by the finance commission on December 8. The financial sector reform:

Indonesia's financial laws are being revised.

Existing regulations are complex and often contradictory. The recent boom in fintech and the central bank's aspirations for a digital rupiah make them outdated.

Government expects improvements to deepen local capital markets to finance the economy.

It's also in keeping with President Joko Widodo's goal of cutting red tape and simplifying laws to speed up crisis response.

What's next for the Fed?

If implemented, the law will allow Bank Indonesia to buy government bonds when the president declares a crisis, reinforcing its unusual move during the pandemic, which the central bank and finance ministry portrayed as a "one-off" measure.

Lawmakers want the central bank to "participate in ensuring financial system stability to facilitate sustainable economic growth" in addition to its present responsibility to safeguard rupiah and price stability.

An previous proposal to incorporate job creation and economic growth in Bank Indonesia's mandate was deleted from the latest measure.

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