BI, LPS Improve Synergy in Financial Crisis Prevention and Settlement

Jakarta, InfoPublik - Bank Indonesia (BI) and Deposit Insurance Cooperation (LPS) had agreed to continue to improve their coordination in the implementation of their respective tasks, particularly in preventing and managing financial crisis.

The cooperation was stated in a memorandum of understanding between the two institutions, signed by Bank Indonesia Governor Agus D.W. Martowardojo and LPS  Board of Commissioners Chairman  Halim Alamsyah in Jakarta, Thursday (7/28).

BI Governor said that BI and LPS have been establishing a close coordination in the implementation of their functions and duties.

With the change in the structure of the Indonesia’s financial system which was marked by the establishment of the Financial Services Authority (OJK) as well as by the enactment of Law No. 9 of 2016 on the Financial System Crisis Prevention and Management (Law on PPKSK), it is necessary to make adjustments to the duties, functions and authorities of institutions within Indonesia's financial system. "For this reason, adjustments are made in cooperation between BI and LPS," said Agus in Jakarta, Thursday (7/8).

Agus explained that the memorandum of understanding between BI - LPS covers seven areas. First, the settlement for failed bank without any systemic effect would be in the form of revocation of business license.

Second, the funding for the management  of bank solvency problems. Third, the exchange of data or information. Fourth, the development of employee competence. Fifth, joint research, studies, or surveys. Sixth, joint dissemination and education. Seventh, the assignment of employee; and the implementation of other tasks in accordance with the law, such as supporting the implementation of the National Non-Cash Movement (GNNT), financial markets deepening, and the expansion of access to finance.

"With the signing of the memorandum of understanding, inter-agency cooperation is expected to be more effective and in accordance with the development of the legal framework, as well as changes in duties, functions and authorities of financial institutions in Indonesia," said Agus. (Translator: Erik Limantara)