Name :MARJOKO

NIM : 045048398
UPBJJ Serang

The central bank in a country, in general, is an agency responsible for monetary policy in that country's territory. The
Central Bank strives to maintain currency stability, the stability of the banking sector, and the financial system as a
whole. In Indonesia, the function of the central bank is carried out by Bank Indonesia. The central bank is an
institution that is responsible for maintaining price stability or the value of a currency prevailing in that country, which
in this case is known as inflation or rising prices, which in other words means a decrease in the value of money. The
Central Bank keeps the inflation rate under control and is always at the lowest possible value or in an optimal position
for the economy (low/zero inflation), by controlling the balance of money and goods. If the amount of money in
circulation is too much, the central bank uses the instruments and authorities it has.

As the monetary, banking and payment system authority, Bank Indonesia's main task is not only to maintain
monetary stability, but also financial system stability (banking and payment systems). Bank Indonesia's success in
maintaining monetary stability without being followed by financial system stability will not mean much in supporting
sustainable economic growth. Monetary stability and financial stability are like two sides of a coin that cannot be
separated. Monetary policy has a significant impact on financial stability and vice versa, financial stability is a pillar
that underlies the effectiveness of monetary policy. The financial system is one of the transmission lines of monetary
policy, so that in the event of instability in the financial system, the transmission of monetary policy cannot run
normally. On the other hand, monetary instability will fundamentally affect financial system stability due to the
ineffective functioning of the financial system. This is the background why financial system stability is still the duty
and responsibility of Bank Indonesia.

The question is, what is the role of Bank Indonesia in maintaining financial system stability? As the central bank,
Bank Indonesia has five main roles in maintaining financial system stability. The five main roles that include policies
and instruments in maintaining financial system stability are: First, Bank Indonesia has the task of maintaining
monetary stability, among others, through interest rate instruments in open market operations. Second, Bank
Indonesia has a vital role in creating sound performance of financial institutions, particularly banks. Third, Bank
Indonesia has the authority to regulate and maintain the smooth running of the payment system. Fourth, through its
function in research and monitoring, Bank Indonesia can access information that is considered to threaten financial
stability. Fifth, Bank Indonesia has a function as a financial system safety net through the central bank's function as
lender of the last resort (LoLR). Yes I agree that a floating exchange rate adds uncertainty to international tradeThe
exchange rate is one of the determinants in international trade. Depreciation of the exchange rate will change the
position of the trade balance. Where in theory the depreciation of the exchange rate will increase the trade balance.