'He' Banks on Insanity

Because of the high SBI interest rate, the Indonesian economy is trapped in the 'Devil's Circle'. But, just pausing for thought, what happens if BI's diagnosis turns out to be wrong?

October 30, 2001

INDONESIA certainly seems to have its own way of dealing with the recession. Throughout the world, it's normal for the central bank of a country to reduce interest rates in order to heat up the economy. However here in Indonesia, for several months now, the interest rate on Bank Indonesia Certificates (SBIs) has stayed high. In fact recently, the SBI interest rate has been at the 17.5 percent level, while interest on deposit accounts is only

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