Bank Indonesia Ends JIBOR Era, Ushers In New Benchmark With Transaction-Based INDONIA Starting 2026

Jakarta - In a decisive move to fortify the integrity of its financial system, Bank Indonesia (BI) has officially terminated the publication of the Jakarta Interbank Offered Rate (JIBOR), effective January 1, 2026. This landmark policy shift concludes the era of the survey-based benchmark and formally establishes the Indonesia Overnight Index Average (INDONIA), rooted in actual interbank transactions, as the nation's primary reference rate. The transition, meticulously planned since INDONIA's parallel launch in 2018, marks a critical step in aligning Indonesia's financial practices with global best practices, aiming to foster a more credible, transparent, and resilient market environment.

The core motivation for this historic reform lies in the fundamental difference between the two benchmarks. JIBOR was traditionally determined based on estimates submitted by panel banks, a methodology increasingly viewed as vulnerable to potential manipulation and disconnect from real market conditions. In stark contrast, INDONIA is calculated using the weighted average of actual overnight interbank lending transactions in Rupiah. This transaction-based foundation makes it a more accurate, objective, and reliable barometer of true liquidity conditions within the banking system.

Bank Indonesia did not undertake this significant change abruptly. The central bank, in close coordination with the National Working Group on Benchmark Reform (NWGBR)—a body including the Financial Services Authority (OJK) and the Ministry of Finance—executed a carefully structured multi-year transition. A pivotal moment came in September 2024 with the official announcement of JIBOR's cessation, accompanied by the release of a comprehensive "JIBOR Cessation Transition Guide" to prepare all market participants for the switch.

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Data confirms that the financial market has been progressively adapting to the new benchmark. A survey by the OJK reveals a dramatic 67.7% decrease in the value of financial contracts maturing before the end of 2025 that referenced JIBOR, falling from IDR 140.37 trillion in September 2024 to IDR 45.28 trillion a year later. Concurrently, activity in the interbank money market, which underpins INDONIA, remains robust, with average daily Rupiah transaction values reaching approximately IDR 15.4 trillion as of mid-December 2025.

The successful adoption of INDONIA is expected to yield profound long-term benefits for Indonesia's economy. A more credible and transaction-backed benchmark rate reduces systemic risk, enhances the accuracy of pricing for a vast array of financial products from loans to derivatives, and improves overall market confidence. This reform is a cornerstone in deepening the domestic financial market, making it more attractive to global investors and better equipped to support sustainable economic growth.

Beyond domestic strength, the reform positions Indonesia within an international context of benchmark overhaul. Following post-2008 global scandals involving rates like LIBOR, financial authorities worldwide have pushed for transitions to more robust, transaction-based rates. Indonesia's proactive shift to INDONIA demonstrates its commitment to participating in a more trustworthy and integrated global financial architecture, mitigating risks associated with outdated reference rates.

With JIBOR now officially retired, Bank Indonesia's focus turns to full market normalization under INDONIA. The central bank will continue its close communication and coordination with banks, corporations, and investors to ensure a smooth continuation for all existing and future contracts. The INDONIA rate is published daily on the front page of Bank Indonesia's official website (www.bi.go.id), ensuring full transparency and accessibility for all market participants.

This strategic reform ultimately transcends a mere technical change in rate calculation. It represents a fundamental upgrade to the plumbing of Indonesia's financial system. By anchoring its benchmark in real economic activity, Bank Indonesia is laying a more solid foundation for monetary policy transmission, risk management, and long-term financial stability, securing the market's integrity for years to come.

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Bank Indonesia Benchmark Reform Financial Market INDONIA Interbank Lending Interest Rate JIBOR OJK