MPR commission agrees to maintain central bank role

MPR commission agrees to maintain central bank role

A'an Suryana, The Jakarta Post, Jakarta

The People's Consultative Assembly (MPR) is close to reaching
an agreement on the future of Bank Indonesia, after the
Assembly's Commission A for constitutional amendment agreed on
Wednesday to specify in the Constitution that the central bank
will remain the country's monetary authority.

The MPR is currently holding a 10-day Annual Session ending
Aug. 10, in which one of the main topics on the agenda is to
debate changes in the country's 1945 Constitution including an
article relating to the future role of Bank Indonesia.

The final decision is expected to be made latter this week in
a plenary session.

But the Wednesday agreement should end earlier fears that the
MPR would not specifically assign a central bank or Bank
Indonesia in the Constitution to perform monetary authority role.
This would implicate that authority over the country's monetary
affairs could easily be transferred from a central bank system to
another system in the future.

Four large factions at the MPR have insisted against
specifying a central bank system in the Constitution.

The above four factions are the Indonesian Democratic Party of
Struggle faction (F-PDIP), the Reform faction, interest groups,
and the United Ummat Sovereignty faction.

Other factions like the Golkar faction, the United Development
faction and the Indonesian Military/National Police faction have
agreed to include in the Constitution that Bank Indonesia, as the
central bank, will perform the role of the country's monetary
authority.

Lawmaker Didi Supriyanto of F-PDIP said that specifying Bank
Indonesia or a central bank as the country's monetary authority
would make it very difficult for the country to later shift to a
non-central bank system because such a change would require a
referendum.

"By putting Bank Indonesia's role and function in the
Constitution, it blocks the possibility for Indonesia to adopt
another system, which may be more suitable for the nation's
economy in the future," Didi told The Jakarta Post.

He said it was sufficient to put the role and function of Bank
Indonesia in a law to ensure legal certainty.

Bank Indonesia officials have called on lawmakers to specify
Bank Indonesia as an independent central bank in the
Constitution.

But Zain Badjeber from the United Development faction said
that to ensure legal certainty on the format of the country's
monetary authority, the constitution should clearly specify Bank
Indonesia as the central bank performing the role and function of
the monetary authority.

"The inclusion would ensure legal certainty and that the
format of the central bank would be strongly recognized. The
inclusion would make it difficult for any parties to change the
system for their own interests," said Badjeber.