Indonesia Crisis Prevention
On Apr. 5, Indonesia FSA issued rules for preventing financial crisis.
- Follows Law No. 9 of 2016 on Prevention and Management of Financial System Crisis.
- Provides elucidation and confirmation on application of policies on crisis management.
- Regulation on determination of status and follow-up supervision of commercial banks.
- Constitutes how to manage issues faced by systemic banks or other types of banks.
- Confirms that bank supervision consists of normal, intensive, and special supervision.
- Includes activation of recovery plan implementation, Deposit Insurance Corporation's
early entry into the management of bank solvency issues, and handover mechanism.
- Bridge Banks
- Procedures for setting up bridge banks - establishing, operating and liquidating them.
- Offers another option in addressing a bank's solvency issues, besides transferring
assets and/or liabilities, or debt to equity swap, or revocating failing bank's license.
- The alternative is setting up a bridge bank to serve as a resolution facility for assets.
- Systemic banks
- Obligations to prepare for preventing and dealing with the possible financial problems.
- Enable banks to start making efforts to solve their financial problems when operating.
- Have to include requirement for controlling shareholder to increase the bank's capital.
- With this rule, they are prompted to resort to bail-in to solve their financial problems.
||Financial; Reporting; Resolution; Risk; Treasury
Last substantive update on 04/11/2017