Deposit guarantee

Deposit guarantee

From Kompas

The government has decided to give a 100 percent guarantee for
deposits placed in a national bank. Unfortunately, the run
recently at several private banks indicates that customers still
do not feel safe depositing their money in banks. They have this
feeling of insecurity because the government has never
specifically explained to the public the mechanism of how this
guarantee policy will be applied.

Let's say that a private bank finally has to be liquidated
because all that the government has done to help it survive has
come to no avail. In this situation, can the deposits be
automatically and speedily transferred to banks appointed to
assist this liquidated bank?

What about the profit that a customer would otherwise enjoy
from his deposit? Does the government guarantee that there will
be no long-winded, complicated and time-consuming bureaucracy in
settling the transfer process? Will there be additional charges?

Given the present economic condition, most customers deposit
their money solely for security reasons and not for investment
purposes. These deposits are not idle funds but operational funds
for household and business purposes. What matters most to
customers is that their funds must be easily available. Unless
the government gives a specific, clear and simple explanation
about the mechanism of the bank deposit guarantee, customers will
not have any trust in whatever guarantee the government offers.
Another run? It is just a matter of time.

What must be pointed out is that it is sometimes the case that
a government policy is applied in a variety of versions, although
an implementation stipulation for this policy has been issued.
So, to win back the trust of customers, in particular, and from
the people, in general, it is important that the government shows
its good intention. A guarantee and a policy alone will not
suffice.

FERRY INDRAPRATAMA

Ciamis, West Java