Analyzing the Economic Stability during COVID-19 Pandemic in Indonesia: The Moderating Role of Money Velocity Management

Fluctuations in the international price of crude oil follows the axioms of the market economy, in which the prevailing price level is mostly decided by the demand and supply mechanism as a fundamental element. Oil price shocks has a negative and significant effect on Gross Domestic Product. Oil shocks transmission mechanism to the economy, starting from the effects of demand, supply, and even exchange rate of trade. Another factor having a significant effect on the stability of the financial system is the monetary cycle, which consists of inflation and the effect of exchange rates. The type of data in this study was time series data taken from January 2020 to December 2022 by conducting a documentation study conducted on the publication of monthly transaction reports from the required data. Financial System Stability Index is measured by the Credit Growth Rate of North Sumatra and monthly data from the Monetary Cycle and Macroeconomic Factors of World Oil Price. Inflation Variable had the highest extraction value, meaning that inflation had a significant effect on North Sumatra Financial Stability and this of course must be taken into consideration for the North Sumatra government in overcoming the impact of covid-19 which can disrupt the financial stability of North Sumatra. The variable money velocity was a moderating variable affecting the relationship between currency exchange rates and the financial system stability of North Sumatra. The results found that financial system stability could be realized by limiting the circulation of foreign currency in Indonesia by only granting ownership permits and foreign currency transactions for certain needs. Then the government must also play a serious role in dealing with the symptoms of inflation by ensuring that the supply chain of basic commodities for industrial and household needs can be comprehensively available so that inflation control can be carried out properly, so that the stability of the monetary system in a country can be achieved significantly and sustainably.