Indonesian President Prabowo Subianto has announced plans to establish the country’s first gold bank, or bullion bank, which is set to be inaugurated on February 26, 2025. The bank aims to optimize the management of national gold reserves while strengthening the country’s economic resilience.
Currently, Indonesia does not have a specialized financial institution to manage state-owned gold. Despite being a major gold producer, much of the domestically mined gold flows abroad. With the establishment of the bullion bank, the government hopes to increase national gold reserves and ensure that the country’s natural wealth contributes more significantly to the domestic economy.
At present, PT Pegadaian (Persero) and PT Bank Syariah Indonesia Tbk. (BRIS) have obtained licenses to operate this business.
Prabowo announced this plan during a press conference following a limited cabinet meeting with economic ministers, including Coordinating Minister for Economic Affairs Airlangga Hartarto and Minister of Finance Sri Mulyani Indrawati.
Get to Know the Bullion Bank
A bullion bank is a financial institution that offers various gold-related services, including deposits, financing, and trading. These services allow customers to save in the form of gold.
The bullion banking industry is regulated under the Financial Services Authority Regulation (POJK) No. 17 of 2024, which takes effect on October 18, 2024. This regulation is a derivative of Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector. The industry includes services such as gold deposits, gold financing, and gold custodial services, all of which are managed by financial institutions.
According to Antara, the concept of bullion banking has been successfully implemented in several countries. In Turkey, banks offer services such as gold accounts, electronic gold transfers, and gold deposits backed by physical gold.
Similarly, Malaysia has regulations that support the implementation of bullion banking, with major banks like Maybank and CIMB offering digital gold investment services.
Secure Gold, Strengthen the Economy
According to Tempo, a study by the Coordinating Ministry for Economic Affairs indicates that a bullion bank can provide widespread benefits for the government, the gold industry, the banking sector, and the public.
For the government, a bullion bank helps conserve foreign exchange reserves by reducing gold imports and promoting domestic gold transactions. The jewelry industry also benefits, as it can source gold directly from trusted suppliers, while the central bank can enhance monetary stability through gold liquidation mechanisms facilitated by the bullion bank.
The gold mining sector also stands to gain. Mining companies can access project financing or enter into forward hedge contracts to mitigate price risks. In this context, a bullion bank serves as both a guarantor and a provider of gold loans for the mining industry.
