Regulatory Alerts2022-12-30
Bank Indonesia Regulation on Sharia Hedge Swap Transactions
Bank Indonesia issued Regulation Number 24/20/PBI/2022 to establish Sharia Hedge Swap Transactions as a hedging instrument for commercial banks to mitigate exchange rate fluctuation risks. The regulation mandates that eligible sharia banks conduct bilateral transactions with Bank Indonesia using underlying economic activities, subject to strict eligibility criteria, documentation requirements, and administrative sanctions for non-compliance. It further defines the operational mechanics, including contract terms, pricing, settlement procedures, and supervisory frameworks to maintain rupiah stability and deepen the sharia financial market.
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