THE ROLE OF STATE FINANCE TO THE BANKING SECTOR

Name: Aisyah Rizana Rahmah

NPM: 10213505

Class: 4EA18

Course: Capita Selekta finance

THE ROLE OF STATE FINANCE TO THE BANKING SECTOR

              Before knowing the role of the country's finances we must know the definition of state finances first. State finances are all rights and obligations of the state which can be assessed with money, as well as everything in the form of money or in the form of goods which may be the property of the state in connection with the exercise of such rights and obligations.

                 The relationship between the state finances to the banking sector can be formulated with a formula that describes the relationship between income and savings in which the income is controlled by the state financial sector whereas in this case the banking plays an important role to regulate storage or saving. In this case the national banking sector is centered on BI (Bank Indonesia), which is the central implementer of the national banking sector.

 

Y = C + I + G + M

                                                                                       

Y = Revenue

C = Consumption

S = Storage / saving

Can be analyzed from the above formula states that income is consumption plus storage. Where S should be developed for the sustainability of one of the financing activities of the state and controlled by the banking sector.

	S = I

 

Should S (Saving) should be developed into an investment to continue to develop funds from the saving in order to remain productive moves for the country. In this case the state plays an important role through the minister of finance serves to regulate Investment and the national banking sector in this case BI serves to regulate from S (saving). Monetary stability and financial system stability are two sides of an inseparable currency. Both of them are related to each other. The following functions and tasks of BI:

• The function of Bank Indonesia

1. Raise public funds

2. Instill funds managed into various productive assets, for example

      In the form of credit.

3. Provide payment services and other banking services.

• Tasks of Bank Indonesia

In order to achieve the predetermined objectives, the tasks of Bank Indonesia include 3 matters:

1. Establish and implement monetary policy, including:

          A. Open Market Operations

          B. Determination of Minimum Reserve Requirements

          C. Role As Lender of The Last Resort

          D. Exchange Rate Policy

          E. Foreign Exchange Reserve Management

          F. Credit Progam

2. Organize and Maintain the Smoothness of the Payment System

In accordance with the Law no. 23 of 1990 concerning Bank Indonesia, one of the tasks of Bank Indonesia is to regulate and maintain the smooth payment system in the field of payment system of Bank Indonesia is the only institution that has the obligation to issue and circulate rupiah money and withdraw, withdraw and destroy from circulation.

3. Task Managing and Supervising the Bank

In order to regulate and supervise the banks, the Indonesian banks establish regulations, grant and revoke licenses for certain institutional or business activities from banks, carry out supervision of banks, and impose sanctions on banks in accordance with applicable laws and regulations.