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.