Stake attention in this memory
The image shows a red wall display with an inscription in both Indonesian and English about the 1997 currency crisis in Indonesia. The text describes the situation in the Indonesian banking system at the time, including the interbank money market, the foreign exchange market, and the stock exchange, which became agitated. The text explains that foreign loans were withdrawn, bank customers rushed to withdraw their money and transfer it into other banks that were considered safer, or exchange it into foreign currencies. This emptied the banks’ coffers and their accounts in the central bank, which consequently suffered from a negative balance. The text further explains the domino effect of the crisis, how banks were forced to buy foreign currencies when the exchange rate was skyrocketing, and the worsening financial difficulty forced many national private banks to borrow funds from the other banks. Such interbank loans were then mostly unpaid for on the due date, and the banks extended the loans consequently, becoming entangled to the expanding liquidity problem (i.e. the domino effect of the crisis). The interbank money market was in danger to fall apart. Many banks eventually had negative capitals. The location of this image is in West Jakarta, Indonesia, at coordinates (-6.138, 106.815).
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