ABSTRACT
•
Because of the historical reason, money supply has been an
intermediate target or an indicator that used by Bank Indonesia (Bl) for
it's attempting to achieve the final goal, namely the low rate of inflation
through controlling the growth of money supply. The strong correlation
between money supply that indicated inflation had been showed in the
beginning of new order era, when hyper-inflation was happened. In it's
duty as the independent institution, BI has the single objection, that is
explained in UU No. 23 tahun 1999, describe that Bl have to be able to
keep the value of rupiah currency stable against the hard currency. The
monetery policy in the specified meaning can be defined as a measure
that is taken by BI to make the macroeconomic situation better, through
controlling the growth of money supply.
During the period of 1984 untill 2002, there were so many things
that deserve to be exarninated, and they can explain why Indonesian
economic was not so tough in order to get rid the monetery crisis out. In
1983 the world's economic had been being recessed, and it affected the
Indonesian economic. The growth of Indonesian economic had decreased
than the previoused years. Indonesian government took an action in
order to increased our economic growth, and one of it's action was
to
make some steps of deregulations in monetery and banking sectors. It
was proved that our GOP had risen not so long to go, and the activities in
the financial sector that supported the real sector had increased very
rapidly. But on the contrary, it could not be .followed the real sector. The
banking sector had expanded their funds in the real sector excessively.
In 1991 inflation had become the serious matter, and BI had to
increase the rate of SBI and the other monetery instuments, for
withdrawing the excessed liquidity in the financial market. And then, in
1994 the real sector began to increase, when Bl implemented the easy
money policy. The increasing of real sector followed by the increasing of
debts that came either domestic or "foreign. And
the situation become
more and more unpredictable when the monetery crisis happened in
1997, it became more difficult to handle it out because of the fragiled
economic and the upheavels situation.
By using the monetery
instruments,
Bl has been able to control
the
growth of money supply.
It
was proved by the observation which has
been done. The quantitative indirect monetery controlling instruments
has been used by BI since 1983. The growth of Primary reserve and
rupiah currency show the strong correlation
in
affecting the growth of
money supply. And
all
the monetery variables above can be affected and
controlled by BI in order to achieve the good final result.
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