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Does Artificial Intelligence Have an Impact on Monetary Policy Effectiveness in Indonesia?

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  • Anisa Syahidah Mujahidah

    (Indonesian International Islamic University, Indonesia)

Abstract

The study empirically investigates the implications of AI Readiness, Broad Money, and political stability for monetary policy effectiveness, as measured by a composite index. The study uses robust fixed-effect panel data estimation techniques to analyse data from 19 OIC member countries between 2019 and 2023, with a focus on Indonesia. The results show that AI readiness and political stability have a substantial positive impact on monetary policy effectiveness in Indonesia, whereas Broad Money has a significant adverse impact. These findings offer relevant policy implications for AI transformation in the financial sector, particularly for effective monetary policy. These findings establish a relationship between the quest for high-quality institutions, defined by the readiness of AI implementation, political stability, and stable broad money. The study adds to a recent body of literature on the impact of AI and other variables on the efficiency of monetary policy.

Suggested Citation

  • Anisa Syahidah Mujahidah, 2026. "Does Artificial Intelligence Have an Impact on Monetary Policy Effectiveness in Indonesia?," Journal of Central Banking Law and Institutions, Bank Indonesia, vol. 5(1), pages 1-24, January.
    • Handle: RePEc:idn:jclijn:v:5:y:2026:i:1a:p:1-24
    DOI: https://doi.org/10.21098/jcli.v5i1.424
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