Macroprudential policy affects the resilience of the financial system, but one (more or less pronounced) effect of this is also that lending rates are affected, which is of consequence to the trade-off between price stability and financial  3  It should also be mentioned that macroprudential supervision is not the only change to better prevent future crises. Many of the regulatory deficiencies prevailing before the crisis are being addressed by the new capital and liquidity regulations of the Basel III accord. Work on improving the regulations is, however, far from complete and intense efforts are under way in various international forums. 4  BIS central bankers’ speeches  stability. To highlight this in more detail, I will provide a general picture of how I view macroprudential policy. As a starting point, I will take the interest rate which households and companies pay for loans ( itlending ). Put rather simply, this can be defined as the central bank’s policy rate ሺ݅௧ ሻ plus an interest rate margin (  t ):  itlending  it   t . The interest rate margin depends on the banks’ compensation for administrative expenses and capital and funding costs, risk premiums and the banks’ profit margin. Credit terms such as the loan-to-value ratio and amortisation requirements are not directly visible in the interest rate encountered by borrowers, but in order to illustrate their effect at an aggregate level, they can be restated into interest rate terms.
Such collaboration can also be extended to facilitate retail payment card transactions via the domestic debit card schemes of both countries. Eventually, I envision ATMs in Malaysia and Indonesia will be linked seamlessly. This will reduce cost, enhance safety and expand outreach. Conclusion Let me conclude with a quote by Malaysia’s second Prime Minister, Tun Abdul Razak Hussein, who said in 1967 that, “We cannot survive for long as independent but isolated peoples unless we also think and act together and unless we prove by deeds that we belong to a family of SouthEast Asian nations bound together by ties of friendship and goodwill” We have indeed come a long way in our cooperation and journey between Indonesia and Malaysia. The potential of Bank Mandiri as a Qualified ASEAN Bank in Malaysia will be a significant milestone for both our countries and the ASEAN region. It represents the realisation of a vision that was formed more than six years ago with the ASEAN Banking Integration Framework, with roots that go even further back. We should expect greater achievements by both our countries. 2/3  BIS central bankers' speeches  Thank you. 3/3  BIS central bankers' speeches