The Indonesian Government has issued two Government Regulations in Lieu of Law. A government regulation of this kind is in essence an Interim Law as it serves the purpose of a law until such time as the House of Representatives (DPR) confirms it as law. The two government regulations relate to Bank Indonesia (BI) and the Indonesian Deposit Insurance Corporation.
The primary reason for the need to issue these interim laws is to address issues that have arisen as a result of the global financial crises that are negatively impacting on many national banking systems. The Indonesian Government clearly feels that Indonesia is not going to be immune from the fallout of the crises. The biggest concern is liquidity and the maintenance of a sound banking system and in an attempt to avert any instability the government has decide to issue the interim laws to pre-empt any possible problems.
It is expected that this initiative will restore confidence in the Indonesian banking sector.
The interim law on BI in essence expands the list of acceptable assets that can be used as collateral in terms of gaining access to Short-Term Funding Facilities provided by BI. Generally, the assets must be of a high quality and easy to convert to cash. The examples provided are BI Certificates (SBI) and State Debt Securities (SUN). It is expected that this measure will allow banks to maintain acceptable levels of liquidity by broadening the base of acceptable types of collateral.
The interim law on the Indonesian Deposit Insurance Corporation (LPS) sets out the additional criteria that can be used in order to change the nominal amounts that can be guaranteed by the LPS. To this end the interim law allows the government to take preventive measures designed to instill confidence in the community that their savings are safe in the national banking system. This is to be done by increasing the amount of savings that are guaranteed.
The government has moved quickly to enact an implementing regulation based n the provisions of the interim law. The Government Regulation on the Maximum Nominal Amount Guaranteed by the Indonesian Deposit Insurance Corporation states that the maximum guaranteed amount has risen from IDR 100 million to IDR 2 billion. This is an increase of 20 times the previous guaranteed level.
The interim laws and the government regulation are in force as of 13 October 2008.
The Indonesian Government has issued two Government Regulations in Lieu of Law. A government regulation of this kind is in essence an Interim Law as it serves the purpose of a law until such time as the House of Representatives (DPR) confirms it as law. The two government regulations relate to Bank Indonesia (BI) and the Indonesian Deposit Insurance Corporation.
The primary reason for the need to issue these interim laws is to address issues that have arisen as a result of the global financial crises that are negatively impacting on many national banking systems. The Indonesian Government clearly feels that Indonesia is not going to be immune from the fallout of the crises. The biggest concern is liquidity and the maintenance of a sound banking system and in an attempt to avert any instability the government has decide to issue the interim laws to pre-empt any possible problems.
It is expected that this initiative will restore confidence in the Indonesian banking sector.
The interim law on BI in essence expands the list of acceptable assets that can be used as collateral in terms of gaining access to Short-Term Funding Facilities provided by BI. Generally, the assets must be of a high quality and easy to convert to cash. The examples provided are BI Certificates (SBI) and State Debt Securities (SUN). It is expected that this measure will allow banks to maintain acceptable levels of liquidity by broadening the base of acceptable types of collateral.
The interim law on the Indonesian Deposit Insurance Corporation (LPS) sets out the additional criteria that can be used in order to change the nominal amounts that can be guaranteed by the LPS. To this end the interim law allows the government to take preventive measures designed to instill confidence in the community that their savings are safe in the national banking system. This is to be done by increasing the amount of savings that are guaranteed.
The government has moved quickly to enact an implementing regulation based n the provisions of the interim law. The Government Regulation on the Maximum Nominal Amount Guaranteed by the Indonesian Deposit Insurance Corporation states that the maximum guaranteed amount has risen from IDR 100 million to IDR 2 billion. This is an increase of 20 times the previous guaranteed level.
The interim laws and the government regulation are in force as of 13 October 2008.
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