Central bank bill doesn't guarantee accountability<\/p>\n
JAKARTA (JP): The Econit Advisory Group, a think tank that
\nconcentrates on economic problems, criticized the government's
\ncentral bank bill for its lack of clear-cut provisions to
\nguarantee Bank Indonesia's accountability and transparency.<\/p>\n
Econit director Rizal Ramli said on Thursday that without
\nthese two elements, a more independent Bank Indonesia (BI) would
\nbe highly vulnerable to corruption.<\/p>\n
\"Independence without accountability would make BI like a
\nstate within a state,\" Rizal told reporters.<\/p>\n
The draft law, submitted by the government to the House of
\nRepresentatives earlier this month, does not say who the central
\nbank's directors would be accountable to, he said.<\/p>\n
\"The board of governors is required by the bill only to report
\nto the President and the House of Representatives every three
\nmonths. But the draft law does not clearly stipulate to whom it
\nshould be accountable and what the consequence would be should
\nits report not be approved,\" he said.<\/p>\n
To ensure transparency, the central bank must be bound by
\ndisclosure requirements like those imposed on publicly listed
\ncompanies, Rizal said.<\/p>\n
It should be required to report to the public its financial
\nindicators such as monetary targets, realization of these targets
\nand other developments, he said.<\/p>\n
Rizal expressed skepticism about the bill's stated intention
\nof creating a fully autonomous central bank, as the bank's
\ngovernor and deputies will still be appointed by the President.<\/p>\n
This could leave an opportunity for government intervention,
\nhe said.<\/p>\n
\"If the governor and his deputies are appointed by the
\nPresident, we're worried that the President would put 'his
\npeople' in these key positions as the previous president has
\ndone,\" he said.<\/p>\n
Rizal said that for the appointment process to be more
\ncredible, it must involve the House of Representatives.<\/p>\n
\"Either the president proposes and the House approves or vice
\nversa,\" he said.<\/p>\n
But Rizal said that even an independent central bank needed
\nsome sort of controls.<\/p>\n
He criticized a clause in the draft that stipulates that the
\nBI governor and deputy governors cannot be dismissed by the
\nPresident, except if they resign or are proven guilty of criminal
\nacts.<\/p>\n
Rizal said the governors and deputies should be liable to
\ndismissal if they perform poorly.<\/p>\n
He urged the government to clarify the central bank's function
\nin the draft legislation, including the safeguarding of the
\nrupiah and price stability.<\/p>\n
\"The rupiah's stability will not necessarily have a positive
\nimpact on the economy if prices are not also relatively stable,\"
\nhe said.<\/p>\n
Rizal also questioned the effectiveness of the government's
\nplan to free BI from its current task of supervising the
\ncountry's banks and to establish a new body to oversee the
\nbanking system.<\/p>\n
If BI no longer supervises the banks, it could lead to
\ncontradictory monetary policies, he cautioned.<\/p>\n
Should the government insisted on this plan, it should ensure
\nthat the new supervisory body would also oversee non-bank
\nfinancial institutions such as multifinance companies, insurance
\ncompanies and the capital market, he said.<\/p>\n
Most importantly, he said, the new bank supervisory agency
\nmust hire personnel from the central bank with integrity and high
\ntechnical competence.<\/p>\n
Rizal suggested that the government also establish a mechanism
\nto coordinate monetary policies and banking policies. (das)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/central-bank-bill-doesnt-guarantee-accountability-1447893297",
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