Bond Stabilization Fund (BSF) in Indonesia: Lessons Learned and Its Precautionary Measures

This journal discusses the plan to establish a Bond Stabilisation Fund (BSF) in Indonesia as a liquidity buffer instrument to mitigate the volatility of the government bond market. Through a qualitative literature review of academic studies and policy reports from 2020–2026, this study assesses the benefits, risks, and lessons from the experiences of other countries such as Thailand and South Korea. The main findings indicate that the BSF can help curb yield spikes during crisis conditions, but it risks creating market distortions, moral hazard, and fiscal pressure if used too loosely. The implication is that Indonesia needs to position the BSF as a last-resort instrument during acute market pressures, with clear activation triggers, time limits, transparency, independent oversight, and a credible exit strategy to maintain market stability without undermining fiscal discipline.