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Financial safety net law guarantees RI's financial system: Minister
Finance Minister Bambang Brodjonegoro said Indonesiaâs financial stability would be aided by the presence of a Financial Safety Net (JPSK) law and that a draft version should be immediately submitted to the House of Representatives
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inance Minister Bambang Brodjonegoro said Indonesia's financial stability would be aided by the presence of a Financial Safety Net (JPSK) law and that a draft version should be immediately submitted to the House of Representatives.
'With the JPSK law, in principle, we hope to establish a procedure for safeguarding the stability of our financial system. The most important thing is that no policy can be criminalizing,' he said as quoted by Antara in Jakarta on Saturday.
The minister said the latest JPSK draft bill had included articles stipulating that the determination of a failed bank's systematic impact could not be conducted during an economic crisis, as doing so would be morally hazardous.
'This can trigger a lot of questions from various parties, such as why a bank is suddenly listed as a 'failed bank' while previously it had no problems,' he said.
The minister further explained that the JPSK draft bill stipulated how a bank could qualify as a domestic systematically important bank (DSIB) or as a big bank needing to be saved, as its closure could lead to the collapse of the country's financial system.
"There are only few banks that have acquired a DSIB status. They are large banks with a lot of customers and transactions involving other banks,' said Bambang.
Initially, the government proposed the JPSK draft bill in 2008, but the House refused to deliberate it, pointing out the vagueness of the phrase, "financial difficulties that could lead to a systemic crisis" as the major reason behind the rejection.
Many House members suspect the JPSK draft bill could grant legal immunity to government officials. Critics also said the draft bill failed to outline a clear rescue scheme for a bank deemed responsible for a crisis.
The JPSK draft bill has also been cited being politically motivated, as it could be used to supply a legal foundation for those implicated in the ongoing investigation in the 2008 Bank Century bailout case. (ebf)(+++)
