| dc.description.abstract | Bank Indonesia as a central bank in the Republic of Indonesia is regulated in
Law No. 3/2004 on Bank Indonesia, and Government Official Gazette No.
4357/2004. In this law, it is stated that Bank Indonesia is an independent state
institution and its duties are to decide and implement monetary policy, to supervise
and maintain the smooth running of payment system, and to supervise and monitor
the banks. The supervision in this context can be understood as indirect supervision
especially in the forms of initial supervision through studying, analyzing and
evaluating the bank reports and direct supervision in the form of inspection then
followed with upgrading actions. Bank Indonesia is given authority of responsibility
and full obligation to develop and supervise the banks through a preventive or
repressive action. By supervising the banking practice, Bank Indonesia is believed to
be able to improve the level of community's trust toward the banking system integrity
and the bank itself that helps improve the economic condition.
The result of this study reveals that (I) the 25 principles of effective bank
control were arranged by a banking supervision committee called the Basie
Committee on Banking Supervision. Seven of the 25 principles are grouped into core
principles, namely, the principle of precondition for an effective bank control, the
principle of licensing and structure, the principle of the stipulation of caution and
condition, the principle of existing banking supervision method, the principle of
condition of information, the principle of supervisor's authority, and the principle of
inter-banking. The principle and method used in bank supervision is basically the
same including regulation, indirect supervision, direct supervision, regular contact
and communication with banks, remedial action and/or sanction application, and
cooperation with the bank supervision authority of the other countries, (2) in doing
banking supervision, Bank Indonesia has an authority to issue license, to regulate, to
supervise and to apply sanction, and (3) the function and role of bank supervision
have an important and strategic position in materializing a healthy banking system.
The implementation of the function and role of the bank supervision reflects the care,
attention and interest of the government in stabilizing the economy, | en_US |
