## Indonesia: Financial Sector Assessment Program-Technical Note on Stress Testing and Systemic Risk Analysis

_IMF Staff Country Reports, February 26, 2025_

## Source details

**Canonical URL:** [Indonesia: Financial Sector Assessment Program-Technical Note on Stress Testing and Systemic Risk Analysis](https://www.imf.org/en/publications/cr/issues/2025/02/26/indonesia-financial-sector-assessment-program-technical-note-on-stress-testing-and-systemic-562721)

## Other formats

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## Bibliographic details
- Published: February 26, 2025
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798229002332.002

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### Overview
- This Technical Note explores Stress Testing and Systemic Risk Analysis for the Indonesia Financial Sector Assessment Program.
- The financial system is relatively small and dominated by banks with high capital and liquidity buffers.
- Analysis is based on mid-2023 data.
- The note covers the methodology and results of:
  - the scenario-based solvency test,
  - the single factor sensitivity analysis,
  - the liquidity test, and
  - interconnectedness analysis.

### Methodology
- Top-down corporate and bank solvency stress tests were undertaken.
- Bank liquidity stress tests were performed.
- Interconnectedness analysis was conducted to assess interbank exposures and cross-border linkages.
- Both scenario-based and single factor sensitivity approaches were used.

### Key Findings — Solvency
- The results of the bank solvency stress test suggest that the banking sector is resilient to multiple macroeconomic shocks.
- There are tail risks for small banks.

### Key Findings — Liquidity
- The overall liquidity position of banks is sound.
- Foreign exchange liquidity risks need to be closely monitored.
- Recommendation: Liquidity Coverage Ratios should be made mandatory for all banks.

### Key Findings — Interconnectedness
- Interconnectedness analysis points to limited interbank exposure.
- Cross-border analysis is hindered by data availability.

### Policy Recommendations and Actions
- Monitor foreign exchange liquidity risks closely.
- Make Liquidity Coverage Ratios mandatory for all banks.

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## Content in this bundle

- **1idnea2025003-print-pdf**
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_Source: https://www.imf.org/en/publications/cr/issues/2025/02/26/indonesia-financial-sector-assessment-program-technical-note-on-stress-testing-and-systemic-562721_