Ada Pertanyaan? Hubungi Kami 
Ada Pertanyaan? Hubungi Kami ANT, Fathan Qorib, Andin Aditya Rahman
The issue of how to deal with failing banks with systemic impact is a crucial issue that must be properly dealt with in Indonesia. Historically, Indonesia experienced the impact of such failures in the late 1990 and more recently with the Bank Century bailout.
Yunus Husein, Deputy of the Presidential Work Unit for the Monitoring of Development Control (UKP4), said that if Indonesia cannot save failing banks with systemic impact, there will be bigger costs to save the entire national economy.
“The banking system will experience a crisis that will result in a much larger expense than to simply save the failing bank, and with a banking crisis, the Indonesian economy will also experience a crisis. The possibility of a multidimensional crisis will arise,” Yunus said during a seminar in Jakarta on Wednesday.
Further, he continued, if the failing banks with systemic impacts are not promptly rescued, this will result in a domino effect within the banking sector.
Despite the potential widespread effects, a definition of, and the criteria for, failing banks with systemic impact does not yet exist in Indonesia. There are no laws and regulations that cover these issues. Currently, relevant criteria is incorporated in the Financial Safety Net Bill that sits neglected at the House of Representatives.
Yunus explained that the Financial Safety Net Bill prescribes five criteria for failing banks with systemic impacts, which mainly sets out the extent of the potential impacts.
According to the Financial Safety Net Bill, failing banks with systemic impacts will affect financial institutions and markets, payment systems, the real sector, as well as having psychological impacts on markets in general.
Excluding the general psychological impact on markets, the criteria is similar to the Memorandum of Understanding between financial institutions in Europe for the bailout of failing banks.
“Psychological impacts to markets may be indicated by bank runs, emergence of negative rumors in the market, and the transfer of funds to a bank or lower-risk financial assets,” Yunus explained.
On the other hand, Sigit Pramono, Chairman of the Indonesian Bank Association, asserts that failing banks are currently handled by the Coordination Forum for Financial Stability (FKSSK), which is comprised of the Minister of Finance, the Governor of Bank Indonesia, the Board of Commissioners of the Financial Services Authority (OJK) and the Indonesian Deposit Insurance Corporation (LPS).
“Handling failing banks must be done swiftly, because if one bank is problematic, others will follow suit,” explained Sigit.
He also affirmed the opinions of Yunus that it is important to pass the Financial Safety Net Bill. If there are failing banks in the future, dealing with them will become legally problematic without the Financial Safety Net Law even with the FKSSK.
(hot/kc)
ANT, Fathan Qorib, Andin Aditya Rahman
The issue of how to deal with failing banks with systemic impact is a crucial issue that must be properly dealt with in Indonesia. Historically, Indonesia experienced the impact of such failures in the late 1990 and more recently with the Bank Century bailout.
Yunus Husein, Deputy of the Presidential Work Unit for the Monitoring of Development Control (UKP4), said that if Indonesia cannot save failing banks with systemic impact, there will be bigger costs to save the entire national economy.
“The banking system will experience a crisis that will result in a much larger expense than to simply save the failing bank, and with a banking crisis, the Indonesian economy will also experience a crisis. The possibility of a multidimensional crisis will arise,” Yunus said during a seminar in Jakarta on Wednesday.
Further, he continued, if the failing banks with systemic impacts are not promptly rescued, this will result in a domino effect within the banking sector.
Despite the potential widespread effects, a definition of, and the criteria for, failing banks with systemic impact does not yet exist in Indonesia. There are no laws and regulations that cover these issues. Currently, relevant criteria is incorporated in the Financial Safety Net Bill that sits neglected at the House of Representatives.
Yunus explained that the Financial Safety Net Bill prescribes five criteria for failing banks with systemic impacts, which mainly sets out the extent of the potential impacts.
According to the Financial Safety Net Bill, failing banks with systemic impacts will affect financial institutions and markets, payment systems, the real sector, as well as having psychological impacts on markets in general.
Excluding the general psychological impact on markets, the criteria is similar to the Memorandum of Understanding between financial institutions in Europe for the bailout of failing banks.
“Psychological impacts to markets may be indicated by bank runs, emergence of negative rumors in the market, and the transfer of funds to a bank or lower-risk financial assets,” Yunus explained.
On the other hand, Sigit Pramono, Chairman of the Indonesian Bank Association, asserts that failing banks are currently handled by the Coordination Forum for Financial Stability (FKSSK), which is comprised of the Minister of Finance, the Governor of Bank Indonesia, the Board of Commissioners of the Financial Services Authority (OJK) and the Indonesian Deposit Insurance Corporation (LPS).
“Handling failing banks must be done swiftly, because if one bank is problematic, others will follow suit,” explained Sigit.
He also affirmed the opinions of Yunus that it is important to pass the Financial Safety Net Bill. If there are failing banks in the future, dealing with them will become legally problematic without the Financial Safety Net Law even with the FKSSK.
(hot/kc)