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View all search resultsIn institutions we trust
Long-term public trust in financial stability and in monetary policy can only be vested in institutions, not in individuals, who come and go.
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Deputy Finance Ministers Thomas Djiwandono (left) and Suahasil Nazara (right) greet journalists on Oct. 15, 2024, upon arriving at then president-elect Prabowo Subianto's residence at Jl. Kertanegara in South Jakarta. (Antara/Muhammad Ramdan)
T
here is only so much trust we should be putting in the individuals who head our government institutions and in any assurance they provide, because we have limited knowledge about their qualifications and motives.
That holds true for any political system. The founding fathers of the United States, who spent a great deal of thought on the subject, were clear about the fact that we cannot fully trust our leaders, even if we ourselves elected them.
“If angels were to govern men, neither external nor internal controls on government would be necessary,” wrote James Madison in the Federalist Papers. Thomas Jefferson was more concrete, stating in the Kentucky Resolutions of 1798: “In questions of power, then, let no more be heard of confidence in man, but bind him down from mischief by the chains of the Constitution.”
Checks and balances are vital in governance, and in market-based economies, the need for a separation of powers also extends to the central bank.
The government’s plan for a deputy finance minister and a central banker to switch positions has naturally prompted questions about institutional separation, quite apart from the fact that the deputy finance minister in question, Thomas “Tommy” Djiwandono, is President Prabowo Subianto’s nephew and a son of former Bank Indonesia (BI) governor Soedradjad Djiwandono.
After BI’s monthly policy meeting on Wednesday, BI Governor Perry Warjiyo was keen to allay concerns about the move reducing central bank independence, noting that BI Board of Governors decisions were made on a “collective and collegial basis.”
House Deputy Speaker Sufmi Dasco Ahmad used the exact same words when he addressed reporters on the same day, and he said Tommy had resigned from Prabowo’s Gerinda Party, where he had served as the treasurer.
