Indonesia

This chapter provides insight into the main features and specificities of the Indonesian banking systems. The chapter moves on to study the recent evolution of the Indonesian financial system, ranging from the post-Asian crisis restructuring to the apparent resiliency to the current sub-prime crisis. It shows that the banking system still plays a central role in its domestic financial markets. Then, it discusses the most recent three-pillar strategies followed by Indonesia, like other emerging countries, to reform their banks, based on privatization, consolidation and increased access of foreign banks. Finally, given their increasing role, the chapter discusses in depth the role that foreign banks can play in the restructuring of the banking system.