Today (18/10), the Governor of Bank Indonesia and the Chairman of the Indonesian Financial Services Authority (OJK) signed an agreement concerning “cooperation and coordination to support task implementation at Bank Indonesia and OJK”. The agreement forms a basis for expediting and optimising coordination between both organisations in terms of their function, task and authority in light of the upcoming transfer of the banking regulation and supervision function from Bank Indonesia to OJK on 31 December 2013.
The agreement is most pertinent at times when the economy of Indonesia faces challenges stemming from global economic uncertainty, like the ongoing crisis. Through close cooperation and optimal coordination between Bank Indonesia and the OJK, a range of coordinated anticipative and corrective actions can be taken systematically in order to maintain financial system stability and resilience in Indonesia. Consequently, an optimal balance can be struck in the macroprudential and microprudential policy mix in order to preserve financial system stability.
In broad terms, there are four salient points covering the scope of this agreement. First, relates to cooperation and coordination regarding task implementation at both institutions. The form of cooperation and coordination detailed includes formulating and issuing policy/regulations under an umbrella of macroprudential and microprudential surveillance for the financial industry, in particular banks, exchanging information on banking supervision and macro-surveillance, formulating joint reviews and research, coordinating to determine the official stance of Indonesia on a range of issues at international fora, as well as educating the general public through socialisation activities.
Second, relates to the exchange of data and information on financial institutions as well as managing the reporting system for such institutions between Bank Indonesia and the OJK. The scope of cooperation here is required to provide more convenient access for both institutions to all data and information along with a coordinated reporting system for bank and non-bank financial institutions.
Third, relates to the provision/utilisation of Bank Indonesia’s assets and resources. Fourth, relates to the provision/utilisation of human capital tasked with assisting the OJK. Support from Bank Indonesia in the form of providing assets and human resources is crucial, especially during the transition period as the banking supervision function is transferred from Bank Indonesia to the OJK in order to ensure that the financial system continues to operate as normal. Therefore, during the initial operating phase, the OJK will occupy part of Bank Indonesia’s office space at Head Office as well as regional offices. Meanwhile, in terms of human capital, Bank Indonesia will assign bank supervisors and support staff from Bank Indonesia to the OJK.
Through the scope of cooperation and coordination detailed in the aforementioned agreement, the transition period for the transfer of the function, task and authority over the banking sector from Bank Indonesia to the OJK will run smoothly without triggering any disruptions to the performance or operation of the financial industry, particularly the banking industry.
Directorate of Communication and International Relations
Gonthor R. Aziz
Indonesian Financial Services Authority (OJK)
Difi A. Johansyah
Source: Bank Indonesia