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Jakarta Post

What we can learn from abolition of UK FSA

  • Dedy Swares Sinaga

    Jakarta

Jakarta   /   Thu, September 24 2020   /  01:00 am
Financial Service Authority (OJK) chairman Wimboh Santoso, OJK deputy chairman Nurhaida, IDX president director Inarno Sjajadi, Bank Indonesia deputy chairman Mirza Adityaswara, Deputy Finance Minister Mardiasmo and other relevant officials launch the T+2 transaction system in IDX  at Bung Karno Sport complex in Jakarta on Nov. 25.(kompas.com/Mutia Fauzia)

In 2013, the United Kingdom dissolved its Financial Services Authority (FSA). Many in Indonesia might have assumed that the move automatically restored the pre-FSA arrangement by putting the banking supervision authority under the Bank of England (BOE). The real story, however, was more complex than the common misreading. To begin with, the dissolution was not about closing or merging of institutions for policy-expediency reasons. Nor was it offered as a panacea for interagency-coordination problems. Truth be told, it was about a bigger theme: paradigm shift in financial regulation. The shift, as a consequence, has transformed the regulatory style in the UK by replacing integrated supervision with the objective-based approach or the twin peaks model. So clearly, the dissolution did not bring back a supposedly more effective older framework. In the newest framework, jurisdictions...