Liquidity Risk,riskmanagement,Transaction Banking,

Liquidity Risk,riskmanagement,Transaction Banking,

To better prepare for crises, Indonesia's Financial Services Authority (OJK) will require banks to design recovery plans to solve financial problems they may face in the future.

The new prerequisites will particularly apply to 12 domestic systematically important banks, said Sukarela Batunanggar, head of the OJK supervisory framework and crisis management department.

Systematically important banks are banks with significant assets and capital, whose bankruptcy could bring about a significant impact on the overall economy.

This arrangement will be part of the derivatives regulation in the Financial Crisis Prevention and Mitigation (PPKSK) Law, Batunanggar said on Thursday on the sidelines of the Asia Pacific Economic Cooperation (APEC) Financial Regulators Training Initiative regional seminar held by Bank Indonesia.

"We have finished the OJK regulation and we have informed the [banking] industry about its principles while also seeking their suggestions. We’re only waiting for the time to finalize it," he said. He said the regulation would be issued in April.

The OJK will also demand that banks develop their own recovery indicators and options to address their problems, particularly capitalization and liquidity, Batunanggar added.

Passed last year, the PPKSK Law lays a legal foundation for policymakers to act promptly during financial crises.

Re-disseminated by The Asian Banker from The Jakarta Post