Bank Indonesia’s 2026 law added a secondary goal of fostering conditions for real-sector growth and job creation while keeping rupiah stability as the primary mandate, continuing a gradual widening since the post-1998 narrowing.

The bank now uses incentive-based tools such as macroprudential liquidity incentives for targeted lending and digital payment systems like QRIS, rather than directed credit, to support MSMEs and labour-intensive sectors without abandoning its core role.

The article concludes that emerging-market central banks can adapt mandates in steps provided the stability anchor remains intact, though success will depend on whether easier policy actually reaches smaller firms as cheaper credit and new jobs.

In early 1998, Indonesians watched the rupiah lose most of its value in a matter of months. Prices soared, banks collapsed, and the central bank meant to hold the line saw its credibility in tatters. Twenty-eight years later, a street vendor in Yogyakarta can take a QR payment from a Malaysian tourist’s phone, and the same central bank is now asked, by law, to care whether her stall can grow enough to hire someone. Between those two scenes sits a lesson central banks rarely advertise.

Central banks like to look permanent. The marble and measured language suggest institutions built once and left alone. The history says otherwise. What a central bank is for has changed again and again, usually after a crisis exposed what the previous model couldn’t handle.

That’s worth remembering when a central bank’s mandate gets rewritten, as Bank Indonesia’s was this year. It’s tempting to read every change as a break with orthodoxy. More often, it’s the latest swing of a pendulum that has never really stopped.

For much of the twentieth century, many central banks, especially in developing countries, were instruments of development. They channelled cheap credit to priority sectors and helped finance governments. The........

© Eurasia Review