Financial Policy for a Green Economy in a Resource-Rich Emerging Economy

Authors

Arlyana Abubakar, Bank IndonesiaFollow
Prayudhi Azwar, Bank IndonesiaFollow
Riris Shanti, Bank IndonesiaFollow
Salman Fathoni, Bank IndonesiaFollow

Document Type

Article

Abstract

This paper analyzes policies aimed at fostering a green economy in a resource-abundant, megadiverse nation such as Indonesia. This study use Delphi and Analytic Network Process methodologies, grounded in the perspectives of regulators, academics, experts, and practitioners in the green economy, to identify the determinants of green financial policies, revealing that fiscal instruments are of paramount importance. Furthermore, both the case and the respondents are Indonesian. This underscores the necessity of instituting incentives in environmentally sustainable sectors and disincentives in carbon-intensive industries. Therefore, the suitable allocation of green budgets within fiscal policy is essential for addressing market failures and expediting the green transition. Moreover, prudential and monetary measures are essential. Asset-based prudential instruments may stimulate demand for green financing, while capital-based prudential instruments could enhance supply. Furthermore, the policy interest rate is crucial for sustaining price and financial stability during a seamless green transition.

Recommended Citation

Abubakar, Arlyana; Azwar, Prayudhi; Shanti, Riris; and Fathoni, Salman (2025) "Financial Policy for a Green Economy in a Resource-Rich Emerging Economy," Bulletin of Monetary Economics and Banking: Vol. 28: No. 2, Article 4.
DOI: https://doi.org/10.59091/2460-9196.2328
Available at: https://bulletin.bmeb-bi.org/bmeb/vol28/iss2/4

First Page

229

Last Page

260

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

Indonesia

Affiliation

Bank Indonesia