Journal of Central Banking Law and Institutions

Quo Vadis of Indonesian Legal Architecture for Banking Industry in the Metaverse

Kristianus Jimy Pratama — 2023-02-01

Banking metaverse is a form of metaverse economic activity carried out by banking industry players. The banking metaverse is a form of technological disruption in the banking industry after technology has entered the metaverse ecosystem. This situation also encourages that legal authorities must respond to the arrangement of the legal architecture of the banking industry in the metaverse ecosystem along with the supervision and enforcement model. The purpose of this study is to explain the errors that occur in understanding the concept of metaverse and banking metaverse. In addition, the purpose of this study is to construct the basics of the legal architecture of the banking industry in the metaverse ecosystem. This research method is a normative legal research method conducted by literature study. The findings of this study are that there are still errors in understanding the concept of the metaverse and the banking metaverse, in addition to that the laws in force in Indonesia have not been responsive to the banking metaverse. Another finding from this study is that the arrangement of the legal architecture of the banking industry in the metaverse ecosystem is to specifically regulate the banking metaverse in one more specific provision. In addition, the model of supervision and law enforcement regarding the banking metaverse can be carried out according to Indonesian law as long as it is regulated by regulators in the future.

Going Digital Rupiah: Some Considerations from Sovereignty, Cybersecurity and Resilience Perspective

Zahrashafa Mahardika — 2023-02-01

Central Bank Digital Currency (CBDC) is a newly introduced concept. CBDC emerged as a part of digital structural transformation of financial systems, but CBDC is percieved by the public as entirely different concept from existing electronic payment mechanism, such as electronic money or decentralized cryptocurrency. The development of digital currency is not only emerged in and isolated developed countries’ monetary policy, but also coming from the emerging market. However, the policy and academic discussion on CBDC is clouded as there are only significant minority of states that is trying to applied it.We observe that basic concept of CBDC is still significantly understudied from regulatory point-of-view. Among the emerging scholarship, (legal) aspect of cybersecurity risk and resilience of the proposed CBDC as electronic system is still understudied. This paper explores the role of BI, as central bank, in implementing CBDC and attempts to conduct a preliminary expose of associated with the cybersecurity risks.

COVID-19 Populism Challenges and China’s Financial Law Responses: Three Emerging Case Scenarios

Wei Shen — 2023-02-01

China’s increasing engagement in international governance order has significant ramifications in international rule-making and institutional build-up. The outbreak of COVID-19 has elevated China’s significance. This article presents a new-perspective analysis of China’s growing influence by focusing on two case scenarios: championship of financial multilateralism and an emerging digital currency landscape. We argue that China’s status as a rising power leads it to advocate for international rules, standards and institutions in a de-Americanized and anti-populist manner.

Central Bank’s Policy Justification In Mitigating Climate Change

Muchammad Chanif Chamdani — 2023-02-01

Increased awareness of the impacts of climate change in recent years has also attracted the attention of central banks in a number of countries. Several central banks have begun to formulate “green policies” according to their authority. For example, issuing a green version of quantitative easing, buying green bonds in order to support the growth of environmentally friendly financial institutions, to setting restrictions or prohibitions on financing non-environmentally friendly industries by banks. Bank Indonesia itself has begun to explore banking policies that are more environmentally friendly, one of which is by managing financial instruments in a sustainable manner and providing green incentives. This then raises questions about the legitimacy of Bank Indonesia in issuing the environmentally friendly banking policy, and what things must be considered in order to maintain the independence of the central bank. This paper attempts to answer this issue by using a normative legal research approach. This research finds that green financial policy was adopted because of the flexibility or independence of Bank Indonesia in using various policy instruments, the expansion of Bank Indonesia's mandate to maintain financial system stability, also institutional relations and involvement in various green financial forums. However, several things need attention such as legitimacy, social acceptance, and accountability.

Legal Aspects of Central Bank's Green Finance Instruments in Indonesia: an Overview

Ratu Silfa Addiba Nursahla — 2023-02-01

Environmental issues have grown significantly as the global warming impact potentially threatens the survival of mankind. This phenomena brings urgency towards a green economy which one of the main agenda is economic instruments. In order to mitigate the impacts, internalization of risks is targeted to influence investment decisions and creation and allocation of credits that are mainly discussed in green financing. This article will discuss the availability of green financing instruments regulatory in Indonesia. The second section will primarily discuss green financing, the role of the central bank and financial services authority, and their instruments that promote green financing. The third section will look at legal issues in general and how far Indonesian law has progressed. However, we are unable to determine the best or most appropriate policy tool because it will be determined by the specifics of the country in question as well as the precise mandate that the central bank has already been given. However, Bank Indonesia can still implement a number of regulatory instruments, such as providing incentives or redirecting resources from carbon-intensive sectors to low-carbon investments, and incorporating ESG factors into frameworks for implementing core tire policies.