The senior deputy governor
Miranda Swaray Goeltom, the articulate monetary expert, will soon reenter Bank Indonesia at a crucial time as the rupiah exchange rate has been weakening and highly volatile due to the strengthening of the American dollar. The House of Representatives approved the appointment of Miranda through a voting process at a plenary session on Monday.
One of three candidates proposed by President Megawati Soekarnoputri for the position of senior deputy governor at Bank Indonesia to replace Anwar Nasution, Miranda had earlier defeated the other two candidates in an elaborate screening process conducted by House Commission IX for the state budget and finance. Most analysts have agreed that Miranda is indeed the best of the candidates.
She will be a worthy deputy to Bank Indonesia's governor Burhanuddin Abdullah, who last June became the first governor of the central bank that underwent a democratic selection process at the House after Bank Indonesia became a politically independent institution in May, 1999.
As a former deputy governor of the central bank from December 1997 to 2003 and its spokesperson, Miranda, besides being highly technical competent and well-experienced in monetary management, also has an extensive international network of contacts at central banks overseas.
This extensive network, especially in major developed countries, is vital in helping Bank Indonesia achieve its primary objective, which, according to the law on the central bank, is to achieve and maintain the stability of the rupiah against goods and services, as well as foreign currencies.
Even though the country adopts a floating currency system, cooperation and solid contacts with other central bank executives are still crucial, because, when it comes to currencies, their prices (exchange rates) are set not by the market but by the central banks. Each central bank still has a monopoly on the currency it issues, and uses that monopoly to dictate the price. The monetary policy decisions by each central bank sets its foreign exchange rate, whether intentionally or not.
Technical competence is also pivotal for the senior deputy governor, as the second top executive, because monetary policy is the most closely watched indicator of economic policy. Moreover, monetary policy action tends to have a fairly immediate impact on real economic activities.
No wonder that almost all analysts and state bankers, as well as private ones, welcomed the selection of Miranda, pointing out that her monetary expertise and experiences would help reassure the market of Bank Indonesia's monetary management.
However, technical competence is obviously only one of the basic requirements that have to be met by the new senior deputy governor. No less important is integrity and the ability to stand up against political pressures or interference, while, at the same time, maintaining smooth coordination with the fiscal authorities (government). It is integrity and leadership that inspire market confidence in an institution, particularly such a politically independent one as the central bank.
Several non-governmental organizations, including Transparency International Indonesia, have opposed the appointment of Miranda, as well as the two other candidates, arguing that none of them has the required qualities -- including integrity -- for such an important position.
There have been a wave of rumors, notably pointed at Miranda's integrity and her alliance with a number of senior politicians, but none of them has ever been substantiated. Nor has she ever been formally charged over any wrongdoing with regards to her former position at the central bank.
Miranda should have fully realized the importance of maintaining integrity to build the credibility of the central bank's monetary policies. Anyway, as policy decisions at Bank Indonesia are adopted through the consensus of the board of governors, there is little chance for any member of the board to pursue his or her personal agenda.
On top of that, the amendments to the central bank law that were enacted early this year stipulate the setting up of a supervisory board consisting of five banking and monetary experts to help the House of Representatives oversee Bank Indonesia.
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