Government to set up deposit insurance agency

Government to set up deposit insurance agency

JAKARTA (JP): The government is preparing the establishment of
a deposit insurance agency to guarantee depositors' money in the
country's banks.

Rizal Ramli, a member of the economic monitoring team, said
here on Tuesday that the plan to set up a deposit insurance
agency was discussed during the cabinet's weekly meeting on
Monday evening.

"The insurance agency will take over the blanket guarantee
scheme currently provided by the government to bank depositors,"
Rizal said.

The government launched a blanket guarantee in early 1998 to
protect depositors following massive bank runs, which had led to
the closure of several major banks.

Minister of Finance Bambang Sudibyo has said the guarantee
will remain in place until the government sets up a deposit
insurance company to take over its function.

Rizal said that during the Monday weekly meeting, the
government had also explored the possibility of freeing
state-owned air carrier Merpati Nusantara from the obligation to
serve certain important but unprofitable routes.

He said President Wahid considered it would be better that the
special missions be carried by a new and separate state owned
company.

"That way, Merpati can concentrate its operations on the more
profitable routes to improve its financial performance," he said.
(cst)