REPUBLIKA.CO.ID, JAKARTA -- Finance Minister Bambang Brodjonegoro said the stability of the financial system is better guaranteed with the Law on Financial System Safety Net (JPSK).
The draft law on the JPSK would soon be proposed to the House of Representatives, Bambang said here on Saturday (7/3).
"The procedure of maintaining the financial stability is clearer. What is more important is no discrimination in policy," he said.
He said the new draft law on JPSK has chapters that no bank is determined having systemic impact in the event of economic crisis to prevent moral hazard.
"Don't determine a bank as having systemic impact in case of crisis as it is dangerous and cause high moral hazard. This could raise questions as to why systemic when there were no such indications before," he said.
In addition, the draft law sets criteria for banks included in the Domestic Systemically Important Bank (DSIB) or big banks that have to be saved, he said, adding closure of the big banks could cause the financial system to collapse.
"The banks have to be saved otherwise the entire financial system could collapse. They are not many . Only those which are big in size , and have many clients and transactions with other banks," the minister said.
He said each word and clause in the draft law on JPSK also have to be clear and not ambiguous that they could not be misinterpreted otherwise for criminal purposes.
"The law must be clear . There should be ambiguity which could be very dangerous and potential to be criminalized . We scarp anything that are vague in meaning and less clear," he said.
He said the procedure of providing rescue fund by the Deposit Insurance Agency (LPS) and other technical matters is also regulated in the draft law to prevent conflict and any attempt of politicizing.
"We want a clear set of procedures that in the event of crisis , we know what we should do without hesitation, no dispute no politicizing. Everything should be based on the law," he said.
Earlier in 2008, the government already proposed a draft law on JPSK, but the parliament rejected the bill for weak definition on financial difficulties in the financial and banking sector that were the sources of systemic crisis.
In addition, the lawmakers rejected the bill proposed by the government as it gave legal immunity to government officials and it had no clear scheme to save banks that triggered the crisis.
The draft law on LPSK was also suspected by the parliament of politically motivated as it was misused to legalize the government to prop up Bank Century, now known as Bank Mutiara, which was then on the brink of bankruptcy and liquidation.
The Parliament also suspected the the government regulation in lieu of law (Perppu) No. 4/2008 on JPSK as the system of taking the decision and financing in the regulation were not clear.
Currently the government still sticks to the regulation of the Law on the Financial Service Authority (OJK) related to the promotion of the role of the Forum of Coordination of Financial System Stability (FKSSK), which is considered adequate to forestall the impact of crisis.
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