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INDONESIA
Journal of Central Banking Law and Institutions
Published by Bank Indonesia Institute
ISSN : 28277775     EISSN : 28099885     DOI : https://doi.org/10.21098/jcli.v2i1
Core Subject : Economy, Humanities, Science, Social,
Humanities Decision Sciences, Operations Research & Management Economics, Econometrics & Finance Law, Crime, Criminology & Criminal Justice Social Sciences
Journal of Central Banking Law and Institutions (JCLI) is an international peer-reviewed journal. ​​JCLI publishes triannually. JCLI focuses on a range of topics examining the intersection of central banking law and institutions on the monetary, financial system, and payment systems that include regulations, governance (including transparency & accountability), credibility, institutional politics, institutional arrangements, and institutional communication. The JCLI’s scope is global, and the journal endeavours to publish high-quality research that contributes to the literature and/or impacts macro-economic policy aimed at enhancing social & economic welfare. Research papers are welcome from central and non-central bank practitioners, academics, and policymakers, regardless of their institutional affiliation and geographic location.
Arjuna Subject : Ilmu Sosial - Hukum
Articles 84 Documents
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CENTRAL BANK DIGITAL CURRENCIES IN THE INDONESIAN SETTING: QUESTIONS & CHOICES David K Linnan
Journal of Central Banking Law and Institutions Vol. 2 No. 2 (2023)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v2i2.45

Abstract

Central Bank Digital Currencies or CBDC have attracted increasing attention worldwide. Discussions take place chiefly at the institutional central bank level, and among financial and monetary economists, but now are moving into legal and political spaces. Meanwhile, Bank Indonesia or BI, the Indonesian central bank, has been an active proponent of a digital Rupiah for several years, seemingly focused on payment system improvements, problematic to the extent on-going digitalisation of the economy is not purely a payment system exercise.The Indonesian Parliament or DPR recently authorised in Law No. 4/2023 BI’s creation and management of a digital Rupiah, but open issues remain: (1) the DPR’s emphasis in its guidelines for the digital Rupiah contemplates currently only a domestic rather than crossborder digital Rupiah; (2) the DPR seemingly contemplated broader financial inclusion and more equitable development as a practical matter, while BI’s prior proposals seemed more focused on efficiency and banking sector; and (3) domestic CBDC’s introduction probably constitutes a dress rehearsal for an eventual international CBDC, so a planning function lies hidden. Digital Rupiah’s implementation presumably lies 12 to 24 months ahead, taking place under a new Indonesian President to be elected in 2024, implying new senior financial sector regulators as well. The best legal approach would be for BI to manage the digital Rupiah through external clearing and settlement institutions, and there are numerous international economic law complications in the hidden planning exercise if domestic is to become international digital Rupiah over time. Developing versus developed country CBDC concerns are simply different.
REGULATING THE CONVERSION OF CONVENTIONAL BANKS TO ISLAMIC: THE 4 QUADRANTS CONVERSION (4-QC) FRAMEWORK Suleiman Sani; Ashurov Sharofiddin; Mustapha Abubakar
Journal of Central Banking Law and Institutions Vol. 2 No. 2 (2023)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v2i2.158

Abstract

This research paper proposes a framework for converting conventional banks to full-fledged Islamic banks as a catalyst for propelling the Islamic finance industry to Islamic Finance 2.0 by addressing the paucity of a regulatory framework for Central Banks to regulate this conversion. To address this, the paper proposes the “4Quadrants Conversion (4-QC) Framework” as a model framework for Central Banks to regulate the conversion process, consisting of twentyfour components classified into four quadrants. The proposed conversion involves leaving Shari’ah non-compliant activities and adopting Shari’ah permissible alternatives. This paper adopts a qualitative research method based on content analysis. The research findings suggest that the proposed regulatory framework can facilitate the successful conversion, resulting in a dual result of creating new Shari’ah-compliant entities and eliminating non-compliant entities. The proposed regulatory framework can also guide banks to plan, implement, and self-assess their progress to ensure a timely and less cumbersome conversion.
THE POSITION OF BRIDGE BANKS AS INSTRUMENTS FOR RESOLVING BANK FAILURES IN INDONESIA Zulfikar Hasan; Kamiluddin
Journal of Central Banking Law and Institutions Vol. 2 No. 2 (2023)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v2i2.162

Abstract

We analysed the capacity for banks to fail in Indonesia. A “failed bank” can be decoded as a bank facing financial difficulties and possibility of collapse. It is no longer feasible for the LPP (Banking Supervisory Agency) to address bank failures under its current authority. In Indonesia, bank failures are managed by the Deposit Insurance Corporation (IDIC), helped by rules from Bank Indonesia and the Financial Services Authority (OJK). Under Article 5 of Law no. 24 of 2004 regarding the Deposit Insurance Corporation, one of the jobs of IDIC is to develop, specify and enforce a procedure for the liquidation of failing banks that do not have a systemic effect and address failing banks that do have a systemic effect. The definition of systemic effect is when a bank’s failure will have an extraordinary impact on the availability of funds and the smoothness and sustainability of the economy. While a non-systemic effect is bank’s failure that does not meet the standards noted above. The implication of our research is to provide an understanding that assistance for failing banks in Indonesia is taken over by the IDIC which will form an entity called a bridge bank.
LEGAL AND REGULATORY ISSUES OF ISLAMIC FINANCE IN TURKEY: A QUALITATIVE DISCUSSION Yas, Murat
Journal of Central Banking Law and Institutions Vol. 2 No. 3 (2023)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v2i3.169

Abstract

This study aims to explore issues related to Islamic financial regulations in Turkey through the use of semi-structured interviews. A total of 12 respondents were involved, including regulators, members of the Central Advisory Board (CAB), the Advisory Board of Islamic Financial Institutions (IFIs), and managers from IFIs in Turkey. The results highlight consistent calls for the establishment of an act for the Participation finance industry. This act is seen as a means to ensure tax neutrality, reinforce norm hierarchy, prevent the imitation of conventional financial products, and mitigate Shari’ah non-compliance risk. Additionally, our empirical findings emphasise the importance of enhancing stakeholder engagement, clarifying roles, establishing a robust organizational structure, and enhancing transparency and independence for regulatory authorities. Improved regulatory governance is crucial for enhancing regulatory outcomes. Lastly, the study underscores the need for standardised guidelines for PFIs and emphasises the significance of their voluntary implementation.
GREEN CENTRAL BANKING: A NEW ROLE FOR THE CENTRAL BANKS IN THE FINANCIAL SYSTEM Omer Faruk Tekdogan
Journal of Central Banking Law and Institutions Vol. 2 No. 2 (2023)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v2i2.170

Abstract

The financial sector has a key role to play in the transition to a more sustainable and low-carbon economy. Being major actors in the financial system, central banks can exert influence to encourage the adoption of green finance and reduce risks associated with climate change. A novel idea called "green central banking" aims to give central banks' operations, regulations, and goals more sustainability-related thought. This study explores the concept of "green central banking," which is just starting to gain traction, as well as potential central bank responsibilities and tasks in the field of sustainable finance. This study also emphasizes the difficulties and dangers of implementing green central banking, including the possible conflicts between financial stability and environmental goals. Also, the article provides a comparative examination of the methods used by central banks as it looks at the state of green central banking in various parts of the world. Ultimately, this study promotes central banks to take a proactive stance in the transition to a greener and more resilient financial system and believes that green central banking can be a critical tool for accomplishing sustainable development goals.
DATA SUBJECT ACCESS REQUEST: WHAT INDONESIA CAN LEARN AND OPERATIONALISE IN 2024? Algamar, Muhammad Deckri; Ismail, Noriswadi
Journal of Central Banking Law and Institutions Vol. 2 No. 3 (2023)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v2i3.171

Abstract

The enactment of the Indonesian Personal Data Protection (PDP) Law is in line with the nation’s position as the most promising digital economy in Southeast Asia. The PDP Law, amongst others, introduces Data Subject Access Request (DSAR), a cornerstone mechanism to exercise data subject rights mirroring the European Union General Data Protection Regulation (GDPR). However, major causes of DSAR failure are predominantly triggered by resource constraint, lack of fundamental understanding, and technical gap when responding to such requests. In practice, DSAR management is time consuming and taxing since organisations shall manage numerous and complex requests within a tight timeline. By way of comparative analysis, we explore the concept of data subject rights, specifically the Rights to Access. Through observations and constructive responses by global data protection professionals, academics and non-lawyers, this paper alluded that similar failure scenario might occur in Indonesia when PDP Law grace period ended in 2024 – if the causes are not addressed and mitigated. Apropos, in safeguarding data subjects’ right, we assert that DSAR under the PDP law might bring disproportionate impracticality, hence there is demand for a robust consultation and holistic regulatory implementation. We also propose to consider a harmonized DSAR ASEAN framework for future proofing cross-border payment, in 2024 and beyond.
ANALYSING THE EFFECT OF CORPORATE ENVIRONMENTAL PERFORMANCE ON CORPORATE FINANCIAL PERFORMANCE: DOES A NONLINEAR RELATIONSHIP OCCUR? Septiavin, Qori'atul; Feriansyah; Rico Ricardo; Achmad Kautsar; Eka Puspitawati; Syifa Salsabila
Journal of Central Banking Law and Institutions Vol. 2 No. 3 (2023)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v2i3.174

Abstract

Climate change as a part of environmental degradation has become a topic widely discussed in recent decades. This study analyses the relationship between corporate environmental performance and corporate financial performance by studying cases at the company level. The company level was chosen to focus the research since companies are the main actors in economic activity as producers of both goods and services. The method used is unbalanced panel data regression with the Random Effects Model with a sample of 175 firms from 2003 to 2021 in 20 countries. This research also captures the influence of the COVID-19 pandemic. Empirical results show that there is no nonlinear relationship between corporate environmental performance and corporate financial performance with the Lind-Mehlum test. It indicates that there is a trade-off between profit and the environment. As such, the effort of businesses to drive investors from the profit-oriented to become green-oriented needs significant effort. A key policy priority should therefore be the long-term reinforcement of businesses in green activities.
CENTRAL BANK DIGITAL CURRENCY (CBDC): A SENTIMENT ANALYSIS AND LEGAL PERSPECTIVE Aisyah As-Salafiyah; Aam Slamet Rusydiana; Ihsanul Ikhwan
Journal of Central Banking Law and Institutions Vol. 2 No. 2 (2023)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v2i2.177

Abstract

Bank Indonesia plans to issue a digital rupiah in the Central Bank Digital Currency (CBDC) development project, the official digital currency issued by the central bank. This study aims to review the perceptions of the scientific literature regarding the CBDC theme from a legal perspective. Its nature is still new and has not been widely implemented by various countries worldwide, making this theme interesting for further study. This study uses a qualitative method with a sentiment analysis approach. The research object is 50 papers published by Scopus-indexed journals until December 12, 2022. The data is then processed using the SentiStrength software, which can be used in conducting sentiment analysis. CBDC is an innovation that is currently being developed by various countries in the world. The results of this study indicate differences in sentiment trends from various pieces of literature, where of the five classifications of sentiment, sentiment showing high positive and high negative amounts to 0%. The positive sentiment is 30%, the negative sentiment is 26%, and the neutral sentiment is 44%. This finding indicates that the dominant sentiment is neutral, where positive and negative levels are equal, followed by positive sentiment and then negative sentiment. The results of this sentiment analysis are an overview that can serve as basic research for regulators, practitioners and academics as valuable insights that can help provide an understanding of the scientific literature's perception of CBDC so that it can be considered in decision making. This research is the first study to conduct sentiment analysis on the scientific literature on the CBDC theme.
LEGAL REVIEW ON CPTPP AND ITS IMPLICATION ON BUMIPUTERA’S POLICIES IN MALAYSIA GOVERNMENT PROCUREMENT Haron, Muhammad Hanafi
Journal of Central Banking Law and Institutions Vol. 2 No. 3 (2023)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v2i3.179

Abstract

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is an open and multi trade agreement that significantly liberalizes international procurement Trans-Pacific markets. Chapter 15 of the CPTPP is covers government procurement. Malaysia signed and eventually ratified CPTPP later in 2022 and needs to incorporate Chapter 15 into its government procurement regulations. Having said this, the question remains on how features of Chapter 15 will stand and comport with the existing protection mechanisms that are practiced by Malaysia in its government procurement regime, namely Bumiputera policy. Malaysia also has claimed some reservation and threshold amounts in the said Chapter under the Annexure 15-A of the State Schedule. Thus, the objective of this writing is, first, to review the existing legislation and regulations in Malaysia that cover government procurement. Then, it discusses how the ratification of the CPTPP will impact the existing Bumiputera policy practiced in government procurement ecosystems. Finally, this writing reviews the Government of Malaysia’s action and plan on government procurement post ratification of CPTPP. This study adopts a qualitative method that mainly relies on descriptive and analytical examinations of statutory provisions and relevant authorities. It concludes that Malaysia’s Bumiputera policy is still unflawed in the government procurement despite the ratification and adoption of Chapter 15 of the CPTPP. BNM as the financial policy advisor to the Government of Malaysia is not being statutorily vested with power to review and provide feedback on CPTPP to the government. This is due to the reservations and high price preferential system imposed by Malaysia for a much longer period before its finally fully incorporated and functional in Malaysia’s government procurement.
AN IDEAL LEGAL TENDER FOR THE DIGITAL ERA Indrawati, Fransiska Ari
Journal of Central Banking Law and Institutions Vol. 2 No. 3 (2023)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v2i3.182

Abstract

The Covid-19 pandemic has accelerated a shift towards digital payments and altered consumer behaviour when it comes to making payments. As a result, the use of state-issued money as legal tender continues to decline in most countries. In turn, the functions and existence of legal tender has decreased. Acknowledging such facts, the purpose of this research is to examine an ideal legal tender for the digital era that can restore the legal tender function while accommodating payment innovation. This research explores legal theories on money and legal tender, as well as the characteristics of various forms of money issued by the State and the private sector, i.e., fiat money, commercial bank money, cryptocurrency, and central bank digital currency. This research concludes that an ideal legal tender for the digital era should incorporate both cash and digital currency. Under this notion, central bank digital currency might serve as the ideal legal tender for the digital era. Nonetheless, there are certain prerequisites to the issuance of such legal tender. These include at least conducting thorough interdisciplinary research and pilot projects by the central bank, establishing an adequate regulatory framework, and ensuring public acceptance of such currency as a means of payment, as well as developing the necessary infrastructure.

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