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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 91 Documents
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DATA GOVERNANCE FOR ARTIFICIAL INTELLIGENCE IMPLEMENTATION IN THE FINANCIAL SECTOR: AN INDONESIAN PERSPECTIVE Damaris, Regina; Rosadi, Sinta Dewi; Bratadana, I Made Diyosena
Journal of Central Banking Law and Institutions Vol. 4 No. 3 (2025)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v4i3.430

Abstract

The fast-evolving landscape of Artificial Intelligence (AI) is transforming industries worldwide, including Indonesia’s financial sector. While AI presents immense opportunities for innovation and efficiency, it also poses complex challenges in data governance. This paper explores the need for Indonesia to establish a comprehensive and forward-thinking data governance framework tailored to AI implementation in the financial sector. Using a literature review method and drawing on global and local regulatory developments, the paper outlines key principles for AI-related data governance, including transparency, accountability, specificity, enforceability, and adaptability. By reimagining its approach to data governance, Indonesia can mitigate the risks of data misuse, enhance personal data protection, and foster an environment conducive to responsible AI innovation. The research addresses the foregoing issues by offering a conceptual foundation for policymakers, regulators, and financial institutions in Indonesia to develop better rules and practices for managing AI-related data to strengthen Indonesia’s technological sovereignty, particularly in the financial sector. The study finds that Indonesia’s current data governance framework in the financial sector is not yet optimal for supporting AI implementation. Indonesia’s data governance framework requires adjustments in key areas, namely specificity, enforceability, and adaptability, while also promoting stronger cooperation among stakeholders.
THE AI PARADOX IN CENTRAL BANKING: NEW POWERS, NEW VULNERABILITIES Koroye, Tamarakemiebi; Alaekwe, Sydney
Journal of Central Banking Law and Institutions Vol. 4 No. 3 (2025)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v4i3.441

Abstract

The integration of artificial intelligence into central banking disrupts the traditional bank regulator relationship, creating asymmetries that private institutions exploit. This paper examines how AI-driven market surveillance and predictive risk modelling erode private banks’ informational advantages, compelling them into a Schumpeterian race for survival in which innovation becomes imperative. Using a qualitative analysis of regulatory developments and financial market adaptations, this study argues that enhanced central bank AI capabilities paradoxically accelerate the emergence of opaque financial segments designed to evade oversight. The findings indicate that this shift transforms regulatory dynamics, positioning central banks as real-time market participants while private institutions develop increasingly sophisticated methods of regulatory evasion. This evolution generates systemic risks that existing regulatory frameworks struggle to address, necessitating adaptive oversight mechanisms. The study concludes that the imperative progressively drives financial innovation to maintain opacity in response to algorithmic supervision, underscoring the need for regulatory models that balance AI’s benefits with emerging vulnerabilities.
REVOLUTIONISING THE SHARIAH SECRETARIAT FUNCTION THROUGH ARTIFICIAL INTELLIGENCE: PROSPECTS AND CHALLENGES FOR MALAYSIA’S ISLAMIC BANKING SECTOR Bin Abdul Rahim, Mohamad Syafiqe
Journal of Central Banking Law and Institutions Vol. 4 No. 3 (2025)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v4i3.444

Abstract

This paper examines the potential and challenges of integrating artificial intelligence (AI) as a transformative approach to revolutionising the Shariah Secretariat function in Malaysia’s Islamic banking sector. The Shariah Secretariat, as outlined by Bank Negara Malaysia’s Shariah Governance Policy Document, plays a vital role in facilitating and supporting the secretarial and administrative matters of the Shariah Committee. This study examines the potential of AI to significantly enhance the effectiveness of the Shariah Secretariat, particularly through process automation, document management, regulatory reporting, and decision-making processes. However, AI integration poses critical challenges regarding the clarity of accountability, liability, and ethical considerations due to the autonomous nature of AI-driven processes. The research underscores substantial gaps in Malaysia’s existing legal and regulatory frameworks governing the application of AI in Islamic banking. To address these challenges, the study suggests specific legislative changes and recommends that Malaysia’s National Guidelines on AI Governance and Ethics principles be made binding to ensure transparent, ethical, and accountable AI practices within Islamic banking. Drawing on international frameworks, including the European Union’s AI Act and the OECD AI Principles, this paper recommends a holistic approach to regulatory refinement in Malaysia, aiming to sustain technological innovation while safeguarding Shariah compliance, ethical standards, and public trust.
AI IN FATWA FORMULATION: TRANSFORMING SHARIA-COMPLIANT FINANCE Priantina, Anita; Mimma Maripatul Uula; Aufa; Evania Herindar
Journal of Central Banking Law and Institutions Vol. 4 No. 3 (2025)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v4i3.446

Abstract

Fatwas play a pivotal role in Islamic jurisprudence, serving as legal instruments to ensure that financial practices align with Shariah principles. For Islamic financial institutions, timely and accurate fatwas are essential to maintain compliance, operational clarity, and stakeholder trust. However, the fatwa development process is often time intensive. This study examines how artificial intelligence (AI) can be leveraged to enhance the efficiency and responsiveness of fatwa formulation. Using the Analytic Network Process (ANP), Shariah advisors and members of the Shariah Supervisory Board of Islamic Financial Institutions assessed the benefits, costs, opportunities, and risks associated with AI adoption. AI’s capacity for comprehensive data analysis is found to be the most weighted benefit. Key concerns include the cost of scientific verification, the risk of automating sacred decision-making, and the weakening of istinbath (legal reasoning) by scholars. To harness AI’s potential while preserving the integrity of Islamic jurisprudence, it is essential to have appropriate tools, training, and governance frameworks in place. AI has the potential not only to streamline the issuance of fatwas but also to transform the responsiveness and scalability of Shariah-compliant financial services. This study contributes to the literature on AI and Islamic jurisprudence by presenting an evidence-based framework for the responsible integration of AI in Shariah governance.
The Key Challenges for Islamic Fintech Implementation in Malaysia bin Ab Razak, Muhammad Ilyas; binti Mohd Dali, Nur Akma
Journal of Central Banking Law and Institutions Vol. 5 No. 1 (2026)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v5i1.270

Abstract

This article explores the evolving landscape of Islamic fintech in Malaysia, delving into the looming regulatory challenges. As Malaysia solidifies its position as the global epicentre of Islamic finance and technological innovation, the intersection of these domains presents a distinctive set of challenges for regulators. The authors scrutinise the challenges and potential gaps within the regulatory framework governing Islamic fintech in Malaysia through meticulous analysis. The key challenges include ensuring Shariah compliance amid rapid technological advancements, addressing consumer protection concerns, navigating cross-border regulatory issues, managing technological risks and cybersecurity, achieving regulatory clarity for innovative models, and addressing talent scarcity and expertise gaps. Ultimately, the recommendations in this article offer valuable insights into developing regulatory models that harmonise innovation with adherence to Shariah principles. By embracing these recommendations, stakeholders in Malaysia can pave the way for a vibrant Islamic fintech ecosystem that thrives on innovation, integrity, and inclusivity. The study employs qualitative research techniques, including a review of existing literature, regulatory documents, and industry reports, to gather information on the regulatory framework governing the Islamic fintech ecosystem.
Blockchain and AI in Combating Financial Corruption: A Systematic Literature Review Mahdani, Rimal; A. Soufyan, Dara
Journal of Central Banking Law and Institutions Vol. 5 No. 1 (2026)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v5i1.412

Abstract

Corruption in the financial sector threatens economic stability, resource allocation, and public trust. This study explores how blockchain and artificial intelligence (AI) can combat this corruption. Using a systematic literature review (SLR) guided by the PRISMA methodology, we analysed articles from 2020 to 2024. Findings show that blockchain enhances transparency through immutable, decentralised ledgers, while AI improves fraud detection through realtime anomaly detection and predictive analytics. Case studies reveal successful applications, such as greater accountability in public procurement and enhanced fraud detection in banking. However, adoption of these technologies faces challenges, including scalability, regulatory hurdles, and data privacy concerns. Integrating blockchain and AI into financial institutions’ operations can strengthen existing anti-corruption measures, boosting transparency and accountability. Yet, this study is limited by the technologies’ early development stage and the shifting regulatory environment. Future research should address barriers to unlocking the full potential of AI and blockchain to build a more equitable financial system.
Does Artificial Intelligence Have an Impact on Monetary Policy Effectiveness in Indonesia? Mujahidah, Anisa Syahidah
Journal of Central Banking Law and Institutions Vol. 5 No. 1 (2026)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v5i1.424

Abstract

The study empirically investigates the implications of  AI Readiness, Broad Money, and political stability for monetary policy effectiveness, as measured by a composite index. The study uses robust fixed-effect panel data estimation techniques to analyse data from 19 OIC member countries between 2019 and 2023, with a focus on Indonesia. The results show that AI readiness and political stability have a substantial positive impact on monetary policy effectiveness in Indonesia, whereas Broad Money has a significant adverse impact. These findings offer relevant policy implications for AI transformation in the financial sector, particularly for effective monetary policy. These findings establish a relationship between the quest for high-quality institutions, defined by the readiness of  AI implementation, political stability, and stable broad money. The study adds to a recent body of  literature on the impact of  AI and other variables on the efficiency of  monetary policy.
Navigating the Future of Finance: The Transformative Role of Generative AI Ali, Hassnian; Aysan, Ahmet Faruk
Journal of Central Banking Law and Institutions Vol. 5 No. 1 (2026)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v5i1.431

Abstract

Generative Artificial Intelligence (GenAI) has the potential to transform the financial services sector by advancing financial modelling, risk assessment, fraud detection, and customer service. This study employs Structured Topic Modelling (STM), a machine learning-based method for analysing unstructured text, to uncover key themes from academic and grey literature. Academic discourse focuses on technical applications, including portfolio optimisation and financial forecasting, while grey literature emphasises ethical risks, regulatory challenges, and operational concerns. The findings reveal that GenAI enhances operational efficiency, optimises risk management, and personalises services. However, challenges related to data security, algorithmic bias, and robust ethical governance persist. Policymakers must develop regulatory frameworks that balance innovation and consumer protection, ensuring privacy, transparency, and accountability. The study identifies five key areas for future research: ethical governance, blockchain integration, employment impacts, AI-driven risk management, and personalised financial services. These insights offer a roadmap for financial institutions, policymakers, and technology providers, highlighting GenAI’s transformative potential while addressing ethical considerations for its responsible deployment.
Exploring AI Integration in Financial Institutions: Challenges, Compliance, and Quality Assurance's Role in Security Rahmatullah, Tasneem; Nozlan, Nurul Nadia
Journal of Central Banking Law and Institutions Vol. 5 No. 1 (2026)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v5i1.445

Abstract

The use of Artificial Intelligence (AI) in financial institutions offers significant opportunities while raising concerns about regulatory compliance, security, and the changing function of Quality Assurance (QA). This research explores the impact of AI integration on fairness, transparency, and financial inclusion in the Malaysian financial sector, and investigates the challenges QA professionals face in navigating the dynamic regulatory landscape, with a focus on data privacy and cross-border regulations. It also examines QA’s role in mitigating technological risks, addressing security vulnerabilities, and supporting organisational transformation. Employing a qualitative methodology, the study combines a desk review of existing literature and a semi-structured interview with an Enterprise Architecture and Quality Assurance Specialist from Bank Muamalat Malaysia Berhad (BMMB). By triangulating theoretical frameworks with practical insights from industry professionals, the study finds that QA plays a pivotal role in ensuring the responsible and secure implementation of AI. Specifically, findings highlight the need for robust QA processes to address algorithmic bias, ensure transparency in AI decision-making, and promote inclusive access to financial services. This research contributes to the discourse on responsible AI adoption in the financial sector by providing practical recommendations for financial institutions seeking to implement responsible AI strategies. This research was conducted in accordance with ethical research standards.
Transparency and Disclosure in the Implementation of Fintech and AI by Financial Service Institutions in Sustainability Reports Prihandini, Wiwiek
Journal of Central Banking Law and Institutions Vol. 5 No. 1 (2026)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v5i1.447

Abstract

This study evaluates the application of financial technology (FinTech) and artificial intelligence (AI), as well as the transparency of their disclosure in Sustainability Reports across four types of financial service institutions (FSIs) in Indonesia: banks, insurance companies, finance companies, and securities firms. By analysing the content of 20 Sustainability Reports, this study finds that banks have the highest level of technology implementation and disclosure, followed by finance, insurance, and securities firms. Although FinTech and AI contribute to operational efficiency, service innovation, and the expansion of financial access, disclosures related to these technologies are still limited in Sustainability Reports, often using terms like “digitalisation” without explicit explanation. These findings underscore the importance of enhanced transparency in technology disclosure to foster public trust and accountability, as well as to ensure compliance with regulations such as the OJK Regulation on Sustainable Finance. This study recommends strengthening reporting standards and regulatory guidelines to improve technology disclosures in the financial sector, thus enabling a sustainable andinclusive digital financial ecosystem.

Page 9 of 10 | Total Record : 91

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