MONETARY POLICY IN THE FACE OF THE GLOBAL ECONOMIC CRISIS

Abstract

Maintaining national financial stability in the face of globalization or global economic crisis is highly dependent on monetary policy. Monetary policy balances price stability and economic growth through a variety of instruments, including inflation, interest rates, and money supply restrictions. Economic globalization has made poor countries increasingly dependent on foreign financial flows and vulnerable to pressure from global organizations such as the World Bank and the IMF. Law No. 23 of 1999 brought about changes in Indonesia's monetary policy, giving Bank Indonesia more autonomy and realizing flexible exchange rates and inflation targeting mechanisms. The 2008 global crisis was a reminder of the importance of open and honest public communication and coordination of fiscal and monetary policies. In addition, Keynesian theory emphasizes the need for policy coordination to handle crises, while the main way to influence economic activity is the mechanism of monetary transmission, which includes interest rates, exchange rates, or credit. In the digital era, advances in financial technology have an impact on the success of monetary policy. Therefore, to maintain macroeconomic stability and encourage sustainable economic growth, especially in developing countries such as Indonesia, it is necessary to have monetary policies that are responsive, flexible, and adaptive to world changes.