The Bundesbank The Deutsche Bundesbank, being the central bank of The Federal Republic of Germany is an integral part of the European System of Central Bank (ESCB) The Deutsche Bundesbank, being the central bank of The Federal Republic of Germany is an integral part of the European System of Central Bank (ESCB) Participate in The ESCB: Participate in The ESCB: * Maintaining price stability * Hold and manage the foreign reserve of The Federal Republic of Germany

The Bundesbank *Arrange the execution of domestic and international payments. * Contribute to the stability of payment and clearing systems.

The Bundesbank The Bundesbank participates in the monetary policy decisions of the governing council of the ECB. It implements the eurosystem’s single monetary policy in Germany. This includes the refinancing of The German Banking System through the eurosystem’s monetary policy instruments.

The Bundesbank Fulfill this mandate without politicel pressure Fulfill this mandate without politicel pressure It is independent of and not subject to instructions It is independent of and not subject to instructions Responsible for providing information about the single monetary policy Responsible for providing information about the single monetary policy

ECB EMU EMS EMU EMS ECB ECB Monetary Policy Monetary Policy

ECB It is the monopoly supplier of the monetary base It is the monopoly supplier of the monetary base A change in money market interest rate induced by the central bank sets in motion a number of mechanisms and actions by economis agents ( SHORT RUN ) A change in money market interest rate induced by the central bank sets in motion a number of mechanisms and actions by economis agents ( SHORT RUN ) A change in the quantity of money in the economy will be reflected in a change in the general level of prices. But it will not induce permanent changes in the real variable, such as: real output / unemployment. ( LONG RUN ) A change in the quantity of money in the economy will be reflected in a change in the general level of prices. But it will not induce permanent changes in the real variable, such as: real output / unemployment. ( LONG RUN )

ECB Operational Framework: Operational Framework: * Operational Efficiency * Equal treatment and harmonisation * Decentralised Implementation

Bank Indonesia Menetapkan dan melaksanakan kebijakan moneter Menetapkan dan melaksanakan kebijakan moneter Mengatur dan menjaga kelancaran sistim pembayaran Mengatur dan menjaga kelancaran sistim pembayaran Mengatur dan mengawasi bank – bank umum Mengatur dan mengawasi bank – bank umum

Bank Indonesia Gubenur Gubenur Deputi Gurbenur Senior Deputi Gurbenur Senior Min 4 max 7 Deputi Gurbenur Min 4 max 7 Deputi Gurbenur

Bank Indonesia Independensi Independensi +: - Semakin tinggi independensi semakin rendah & stabil tingkat inflasi sehingga mendorong pertumbuhan ekonomi jangka panjang +: - Semakin tinggi independensi semakin rendah & stabil tingkat inflasi sehingga mendorong pertumbuhan ekonomi jangka panjang - Semakin tinggi independensi semakin kecil defisit anggaran belanja dalam jangka panjang - Semakin tinggi independensi semakin kecil defisit anggaran belanja dalam jangka panjang -: - KebMon merupakan bagian dari kebijakan ekonomi secara keseluruhan sehingga tidak ada artinya jika memisahkan keb.fiskal, moneter dan ketenagakerjaan. -: - KebMon merupakan bagian dari kebijakan ekonomi secara keseluruhan sehingga tidak ada artinya jika memisahkan keb.fiskal, moneter dan ketenagakerjaan. - Apabila pejabat bank sentral tidak dipilih secara demokratis maka keputusan tentang suku bunga, nilai tukar, inflasi & hal – hal moneter lainnya tidak mewakili kepentingan masyarakat pada umumnya. - Apabila pejabat bank sentral tidak dipilih secara demokratis maka keputusan tentang suku bunga, nilai tukar, inflasi & hal – hal moneter lainnya tidak mewakili kepentingan masyarakat pada umumnya.

Bank Indonesia Tingkat Independensi BI : Tingkat Independensi BI : * goal Independence * Instrument Independence * Personal Independence

Bank Indonesia UU no 23 tahun 1999 UU no 23 tahun 1999 Perubahan independensi BI: Perubahan independensi BI: * Tahun 1968 – 1999 ( Political independence & Economic independence terbatas ) * Tahun psl 41 : masa jabatan dewan gubernur - psl 57 : dewan gubernur tidak dapat diberhentikan kecuali alasan tertentu

Bank Indonesia - psl 47 : Dewan gubernur tidak boleh merangkap jabatan lain - psl 43 : Wakil pemerintah hadir dalam Rapat Dewan Gubernur, memiliki hak bicara tapi tanpa hak suara - psl 7 : Mencapai dan menjaga kestabilan rupiah - psl 8 : Menetapkan & melaksanakan KebMon - psl 10 : Menetapkan suku bunga kunci - psl 12 : melakukan kebijakan nilai tukar - psl 56 : Dilarang memberikan kredit pada pemerintah

Bank Indonesia KebMon : kebijakan otoritas moneter atau bank sentral dalam bentuk pengendalian besaran moneter untuk mencapai perkembangan kegiatan perekonomian yang diharapkan KebMon : kebijakan otoritas moneter atau bank sentral dalam bentuk pengendalian besaran moneter untuk mencapai perkembangan kegiatan perekonomian yang diharapkan Tujuan: Tujuan: * Price stability * Output riil * Lapangan kerja

Bank Indonesia KebMon KebMon Ekspansif Kontraktif Instrument KebMon : -OPT -Politik Diskonto -RR -Moral Suasion Strategi KebMon: -Penargetan nilai tukar -Penargetan Besaran Moneter -Penargetan Inflasi -Implicit but not explicit anchor

The Key Messages from monetary policy theory Do not try tricks; do not try to be too clever Do not try tricks; do not try to be too clever Keep steady; remain committed to your mandate even in exceptional circumstances Keep steady; remain committed to your mandate even in exceptional circumstances Say as much as you can of what you are going to do; announce a strategy Say as much as you can of what you are going to do; announce a strategy Do not be dogmatic; instead follow of policy which is always in line with your strategy Do not be dogmatic; instead follow of policy which is always in line with your strategy

Literature from Kydland and Prescott Kydland and Prescott argued that in fact, price showed a counter-cyclical behaviour - when economic growth slowed down, prices rose and when economic growth was strong, prices fell. They further argue that there are other myths surrounding business cycles. These include the idea that real wages fall as growth increases and vice versa (or are not related to the business cycle) and that the money supply is an important factor in leading economic growth.