INDONESIA has launched its first bullion banks in a bid to draw tonnes of privately held gold into the financial system of South-east Asia’s largest economy.

The region’s largest gold producer on Wednesday (Feb 26) inaugurated gold banking services at state-owned Bank Syariah Indonesia and pawn broker Pegadaian, a unit of state-run banking giant Bank Rakyat Indonesia, with officials saying more licences could follow.

President Prabowo Subianto, speaking alongside dozens of ministers and other officials at a launch event in central Jakarta, said he hoped the move would accelerate savings and boost gold reserves, which he said were already the world’s sixth largest.

“Indonesia is a rich country,” he said. Bullion banking “can help save the country’s foreign exchange, because from upstream to downstream gold will be processed and stored domestically,” helping to increase monetary stability.

He said he expected the move to boost economic growth and create jobs.

Erick Thohir, minister of state-owned enterprises, said Indonesians privately held about 1,800 tonnes of gold. “We want to invite the public to trust the formal financial system,” he said, adding that the bullion banks would offer services in gold deposits, pawnbroking, financing and direct trading.

Source: BUSINESSTIMES