Jakarta – The nomination of Thomas Djiwandono, President Prabowo Subianto's nephew, for Deputy Governor of Bank Indonesia (BI) could damage the independence of the central bank. This move could undermine investors' trust and disrupt national economic stability.

The government has put forward the names of Thomas along with Dicky Kartikoyono and Solikin M. Juhro, two career Bank Indonesia officials, as prospective deputy governors to the House of Representatives to undergo fit-and-proper tests. Thomas, currently serving as Deputy Finance Minister, is widely rumored to be the frontrunner to replace Juda Agung, who recently resigned. Juda, in turn, is reportedly slated to take over the Deputy Finance Minister post.

This swap of strategic positions is rife with conflicts of interest and adds to the long list of government intervention in the central bank. It is an inseparable part of Prabowo's endeavor to take control of both the fiscal and monetary authorities. However, in the history of sound Indonesian political economics, there has always been a clear line between monetary authority and fiscal political interests.

The nomination of Thomas has gone ahead as if it were "organic," despite having the potential to be in violation of a number of laws. According to Law No. 23/1999 on Bank Indonesia, his close family relationship with Prabowo could lead to conflicts of interest if he is selected.

Furthermore, Law No. 4/2023 on the Development and Strengthening of the Financial Sector (P2SK) mandates that candidates for the BI Board of Governors possess expertise and experience relevant to their duties and must not be active members or officials of a political party at the time of their nomination. In this regard, it is not just Thomas' experience that is being scrutinized, but also his resignation from the Gerindra Party was only made public recently.

The market responded negatively to Thomas' nomination. On January 21, 2026, when almost all currencies were strengthening against the United States dollar, the rupiah slumped to 16,977. On the stock exchange, foreign investors responded by selling off stocks worth Rp3.05 trillion in the last week.

This decision also shows that Prabowo and his economic team are still uncertain about the roots of the economic problems and view Bank Indonesia as an obstacle. However, the main problem is that state revenues are falling because of an increase in spending, which has led to the deficit soaring.

Their solution is for the government to take out loans to close the widening budget deficit as a result of not reducing spending. The government has chosen to monetize debt by printing new currency to buy its own government bonds. The aim is that state expenditure can be financed without debt.

Intervention in Bank Indonesia actually began during the era of President Joko Widodo through the burden-sharing policy that involved sharing the financing burden through the central bank buying government securities. This continued with Finance Minister Purbaya Yudhi Sadewa's "coercive endeavor" obliging Bank Indonesia to deposit surpluses from managing portfolios or assets before the auditing process had been completed.

The problem is that targeting Bank Indonesia's surplus as an alternative source of state revenues means encouraging the central bank to seek profits. This is dangerous because the main task of Bank Indonesia is to maintain the stability of the rupiah exchange rate, not to be oriented towards profits. If the central bank were required to make a profit, it would not carry out market operations, which could cause significant problems.

If Bank Indonesia comes under the control of the government, Prabowo will repeat the dark history of the New Order era with its Monetary Board that gave rise to a number of major economic problems and ended with the 1998 crisis.

– Read the complete story in Tempo English Magazine

Source: https://en.tempo.co/read/2084002/the-end-of-bank-indonesias-independenc