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