The Ministry of finance prepared omnibus law for the financial sectors to strengthening the industry - Photo by MoF Office

JAKARTA (TheInsiderStories) – The Ministry of finance (MoF) prepared omnibus law for the financial sectors to strengthening the industry, the draft showed. The program is part of the strategic activities of the fiscal policy agency in 2021.

In the draft, there are some urgencies prepared by the ministry. First, a solution and a breakthrough to resolve the regulatory barriers that are scattered in many financial services sector laws. Second, the developing and strengthening the financial sector, included in the national legislation program. And third,

The drafting of this bill, said the draft, is also expected to support the financial sector through technological developments and business innovation, as well as conglomerate structures in the financial services that require strengthening integrated supervision. The planning, January – August is the process of collecting and processing data and information and March – December conducting studies and formulating policies.

At the same time, the government and the House of Representatives are also preparing to revise Law Number 23 of 1999 concerning Bank Indonesia (BI). One of change are bank supervision from the Financial Services Authority. On Dec. 31, 2013, the agency officially supervised the performance of all financial sectors, including banks, taking over the duties that had been carried out by BI for years.

Finance ministry, Sri Mulyani Indrawati, explained in a virtual conference on Tuesday, the experience of the 1997 – 1998 Asian Financial Crisis and the 2008 Global Financial Crisis has become a valuable experience for Indonesia and gave birth to reform the Indonesian financial system to make it more stable, resilient, efficient, inclusive, and grow.

The amendments to the BI Law and the issuance of the Indonesia Deposit Insurances (IDIC) law were carried out after the crisis, while the FSA Law and the Financial System Crisis Prevention and Management Law were issued after the 2008 crisis.

She asserted, an important lesson from the preceding crisis situation and in dealing with the extraordinary conditions caused by COVID-19, that have a possibility to creates potential problems in the financial system that must be watched out and detected early.

The minister conveyed, if any indication of a problem is found, a joint examination and evaluation will be carried out which will become the basis for the institution to determine anticipatory steps for handling the next problem. These joint examinations and evaluations are accompanied by strengthening coordination among financial sector supervisors to oversee and enforce regulations that are coordinative both between sectors and between instruments.

“Each system has advantages and disadvantages that need to be studied more carefully in order to strengthen the banking supervision system,” said Indrawati by adding the strengthening was also carried out in terms of instruments that can be used by the banks in overcoming the problems.

Currently, the government reviewing the simplification of liquidity instrument requirements for banks in order to increase the accessibility of banks that require liquidity support, for example short-term liquidity loans and sharia short-term liquidity financing by Bank Indonesia as the lender of last resort.

While, the role of IDIC being limited to a function of loss minimizer to risk minimizer. In this case, the body can conduct early intervention, including placement of funds, provide a legal certainty and strengthen confidence for the financials stability committee in making decisions.

“With this strengthening, it is hoped that the existing policies and instruments can be optimized to anticipate and handle problems in order to maintain financial system stability,” she concluded.

Written by Editorial Staff, Email: theinsiderstories@gmail.com