Indonesia's urgent push to establish a gold bank reflects the nation's growing ambition to better manage its vast gold resources and bolster its financial sector. The Financial Services Authority (OJK) has confirmed that the establishment of a bullion bank will be a crucial step in strengthening the country’s financial systems, particularly in managing its gold reserves.

As one of the world's top gold producers, Indonesia faces a paradox: although it has abundant gold reserves, it is also a major importer to meet its domestic demand. The government aims to resolve this by integrating gold into Indonesia’s financial balance sheet, a move that will allow the country to gain full value from its gold stock, unlike its current practice of merely recording the tonnage in warehouses.

The creation of a gold bank is outlined in the Financial Services Authority Regulation (POJK) No. 17 of 2024, which will take effect on October 18, 2024. This regulation enables the implementation of bullion business activities, including gold savings, trading, financing, and custody, within the financial services sector. This initiative is a direct mandate of Indonesia’s Financial Sector Development and Strengthening Law (UU P2SK) passed in 2023. By managing its gold through financial institutions, Indonesia will align itself with global trends where countries like Singapore already include gold in their banking balance sheets.

The OJK is already in talks with major financial institutions like PT Bank Rakyat Indonesia (BRI) and PT Bank Syariah Indonesia (BSI) to take the lead in managing the gold bank operations. This initiative will also help bridge the supply and demand for gold in Indonesia, a sector that has long been underdeveloped compared to other Southeast Asian countries.

The establishment of the bullion bank is expected to stimulate the gold industry, from mining to refining and manufacturing. Not only will it support the jewelry industry, but it will also encourage investment in gold, potentially driving up demand. Moreover, it could stimulate the domestic mining sector, allowing smaller miners to access more funding and reduce reliance on foreign markets​.

The gold bank will be operational by mid-2025, with an expected positive impact on both small-scale investors and the wider Indonesian economy. Coordinating Minister for Economic Affairs Airlangga Hartarto emphasized the importance of this initiative, noting that it will empower Indonesia to manage its gold resources independently and avoid further reliance on foreign bullion markets​.

In conclusion, Indonesia's move to establish a gold bank is a timely and strategic initiative that promises to transform its financial sector, improve its gold trade, and contribute to long-term economic stability.