Friday, October 17, 2008
Financial System Security Net
Since the last few weeks, the mass media has constantly reported about the worsening economic condition of countries like USA, Japan, European Union, although their governments have taken emergency actions to cope with the crisis. In this connection on Wednesday 15 October our President issued another emergency law to anticipate the current global economic crisis i.e Perpu 4/2008 regarding the Financial System Security Net. This law is effective on 16 October and will give power to the Central Bank (Bank Indonesia/BI) and the Department of Finance to take over Shareholder Meeting of a national bank or financial institution that failed to to function properly. Kompas reported that the Minister of Finance as ad interim Coordinating Minister for Economy Sri Mulyani made this announcement on Thursday 16 October, explaining that The main purpose is to prevent and handle crisis by Providing Financial or Funding Facility, Temporary Equity participation, Insentive and Facility to expedite solving of problems faced by the Private Sector. It would be possible for the government to issue a special financial instrument for BI, afterwards the fund will be channelled to financial institution that is facing a sistemic crisis. Such instruments consists of Providing Emergency Financial Facility and Providing Additional Share through temporary Equity Participation. If a bank received the Emergency Financial Facility, BI will be authorized to change the bank's board of directors, and place a bank under special surveilance.
With all the extra authorities given by the 3 new Perpu, the government now has all the power it needs to minimize the impact of the current global economic crisis on our economy. Let us hope that those powers will be used properly according to the laws, regulations and common sense so that our country's economy will recover soon.