Bank Indonesia’s (BI) warning about the risk of a global crisis resembling the 2008 financial meltdown has resurfaced, this time highlighted through reporting that emphasizes the possibility of a “repeat” of such a crisis.
In its 2025 Report on Economic and Financial Developments and International Cooperation (PEKKI), BI points to three major sources of shocks: rising public debt, high interest rates, and the aggressive behavior of non-bank financial intermediaries (NBFIs) that are heavily involved in developed-country sovereign bonds and complex derivatives, often with thin margins and limited capital buffers.
The figures are indeed substantial. BI notes that global public debt has reached approximately US$110.9 trillion, or 94.6% of global GDP. Meanwhile, the IMF in its latest Global Financial Stability Report also warns of “elevated” valuations in risky assets—such as technology stocks and corporate credit—which are exposed to sharp corrections if earnings expectations are not met. At the same time, government bond markets face pressure from widening fiscal deficits, according to Reuters reports.
In parallel, the IMF and global regulators highlight the growing role of NBFIs, which now manage nearly half of global financial assets and are increasingly interconnected with the banking system through repo transactions, syndicated lending, and other financing channels. BIS studies show that since the 2008 crisis, the ratio of NBFI assets to global GDP has grown significantly faster than traditional banking assets.
This framing is reasonable as a call for vigilance. However, jumping from these facts to the conclusion that a “2008-style crisis is about to repeat” overlooks a key reality: the architecture of the global financial system in 2025 is fundamentally different from that of 2008—both in terms of risk sources and policy instruments available to manage crises.
Why a “Copy-Paste” 2008 Crisis Is Unlikely
To assess whether history is repeating itself, it is important to recall what actually broke in 2008. At that time, global banks were highly leveraged with thin capital buffers, subprime mortgage products were deeply embedded in bank balance sheets, regulatory capital and liquidity frameworks were weak, stress tests were limited, and transparency was low. When housing prices collapsed, losses directly hit the core of the banking system.
After 2008, global regulatory responses were aggressive. Basel III raised capital and liquidity requirements, strengthened stress testing, and improved risk transparency. Standardized derivatives were required to go through central clearing, making counterparty exposures more traceable.
In Indonesia, the Financial Services Authority (OJK) reported that by the end of 2022, the banking sector’s average liquidity coverage ratio (LCR) was around 244%, and the net stable funding ratio (NSFR) stood at 140%, both far above the regulatory minimum of 100%.
This indicates not only stronger capital buffers but also significantly improved liquidity resilience compared to pre-2008 conditions. IMF Financial Sector Assessment Program (FSAP) 2024 findings are consistent with this view: Indonesia’s financial system is assessed as having strong capital and liquidity buffers, albeit relatively small in scale and still dominated by banking institutions.
Standardized derivatives are now required to pass through central clearing, making cross-exposures more transparent. Many jurisdictions—including Indonesia—have strengthened macroprudential frameworks such as loan-to-value (LTV) ratios, countercyclical capital buffers, and integrated bank–NBFI supervision, now widely adopted as standard practice according to the IMF.
Today’s risks have shifted. The IMF and other international reports point to new global vulnerabilities: high asset valuations, significant bank exposure to hedge funds and private credit, and liquidity risks within NBFIs and open-ended funds. This means that if a shock occurs, the first wave is more likely to originate in non-bank financial sectors and capital markets, rather than in traditional banking as in 2008.
This does not make the system safe. However, the key difference is that these risks are already well-identified. The IMF, BIS, G20, and national regulators have explicitly mapped vulnerabilities in NBFIs and their linkages to banks.
Crisis-response toolkits are also far more advanced: central bank swap lines, emergency liquidity facilities, bank resolution frameworks, and bail-in mechanisms are now in place—tools that were largely developed in real time during the 2008 crisis.
A crisis may still occur, but the likelihood of an identical 2008-style event is low. Financial crises rarely repeat as exact replicas; what tends to repeat is analytical complacency rather than identical structural failures.
Indonesia: Vulnerable, but Far from Fragile
Where does Indonesia stand in this global landscape of uncertainty? Here, narratives of an imminent 2008-style crisis often diverge from domestic data.
First, bank capital buffers are strong. OJK data shows Indonesia’s banking capital adequacy ratio (CAR) at around 26–27%, among the highest in ASEAN. IMF FSAP 2025 notes Tier 1 capital ratios above 25%, with many banks holding government securities far above minimum liquidity requirements.
Second, macro-financial vulnerability is relatively low. The IMF assesses Indonesia’s macro-financial risk as “low.” There is no significant credit boom in household debt or property markets comparable to pre-2008 conditions. Household debt stands at around 17% of GDP, and Indonesia did not experience a major housing bubble during the low interest rate era.
Third, financial stability is supported by coordinated policy frameworks. The Financial System Stability Committee (KSSK) stated in its 2025 quarterly release that the financial system remains stable, banking intermediation is improving, and external risks are being mitigated through a policy mix of monetary, macroprudential, and fiscal tools. Under the Financial Sector Development and Strengthening Law (P2SK), coordination between BI, OJK, LPS, and the Ministry of Finance has been further reinforced.
Indonesia’s exposure to global financial institutions is present but not extreme. World Bank data shows that cross-border bank claims on Indonesian borrowers amounted to about 17.5% of GDP in 2020. This indicates integration into global finance, but not at the level of major financial hubs where foreign claims can exceed GDP many times over.
In the local currency bond market, the Asian Development Bank’s Asia Bond Monitor reports that Indonesia’s local currency bond market reached around IDR 6,786.5 trillion as of March 2024. Government securities dominate this market. Importantly, domestic investors hold about 85.8% of tradable government bonds, while foreign investors hold around 14.2%.
This matters. While foreign investors can trigger volatility in yields and exchange rates through capital flows, the dominance of domestic investors significantly reduces the risk of a classic “sudden stop” crisis seen in more externally dependent economies.
However, one often overlooked channel of global financial exposure is reinsurance. Approximately 40.2% of reinsurance premiums in 2024 flowed abroad, according to OJK. This means a large share of Indonesia’s risk-sharing capacity for disasters and large-scale risks still depends on global capital.
If global reinsurance markets tighten—due to large losses or regulatory shifts in financial centers—the consequence would not only be higher domestic premiums but also potential protection gaps, forcing more risk retention within domestic balance sheets. Here, NBFI interconnectedness becomes directly relevant.
Vigilance Without Panic
BI’s warning should be interpreted as a call to strengthen financial architecture—not as a signal of imminent collapse. At the global level, the agenda is clear: tighten oversight of NBFIs, address sovereign debt vulnerabilities, and strengthen regulation of new financial instruments such as crypto assets.
Domestically, the priorities are equally concrete: deepen local currency financial markets, reduce foreign currency mismatches, strengthen non-bank financial supervision, and maintain fiscal discipline to preserve policy space during shocks.
Two extremes must be avoided: complacency that assumes crises are no longer possible, and alarmism that declares a “2008 redux” without contextual grounding.
Systemic stress testing becomes essential here—not only at the level of individual banks, but across the entire financial ecosystem, including scenarios involving capital outflows, asset price corrections, and tightening global reinsurance capacity.
As long as such systemic mapping and stress-test results remain transparent in policymaking, the gap between market volatility and systemic crisis can remain wide.
Modern economies are built on confidence and expectations. The role of analysis and policy communication is not to generate panic, but to cultivate rational vigilance: acknowledging risks, strengthening foundations, and maintaining justified confidence.
The 2008 subprime crisis taught the high cost of ignoring risk. The lesson for 2025 is different: to be honest about vulnerabilities, while also recognizing that stronger regulation, better coordination, and more sophisticated stress testing can ensure that future shocks remain manageable turbulence—not systemic collapse.
Indonesia is not waiting for a financial disaster to repeat itself; it is preparing so that the next shock becomes a contained episode within a mapped stress scenario, not a breakdown of the system itself.
Professor Perdana Wahyu Santosa is Professor of Financial Economics and Business and Dean of the Faculty of Economics and Business at Universitas YARSI. He is also Research Director of GREAT Institute and Founder/CEO of SAN Scientific.
