IMPROVED QUALITY OF BANKING REGULATION

"Creation of an effective system for bank regulation and supervision based on international standards."

This program has the objective of improving the effectiveness of regulation conducted by Bank Indonesia and achieving compliance with regulatory standards based on international best practices. The program can be achieved through improvements to bank policy-making processes and by phasing-in the comprehensive implementation of the 25 Basel Core Principles for Effective Banking Supervision. Thus in the next five years, Bank Indonesia expects to bring itself on par with other nations in the application of international best practices, including the 25 Basel Core Principles for Effective Banking Supervision. Alongside this, concerning the bank policy-making processes, Bank Indonesia expects to have in place an effective system for formulation of banking policy within the next two years that provides for stakeholder participation in the policy-making process.

:: Phase of Implementation

No	Activity (Pillar II)		Implementation Schedule
1.	Formalizing the syndication process in policymaking for the banking system
	a.	Involve a third party in banking system policymaking	2004
	b.	Form a panel of banking experts	2004
	c.	Facilitate the formation of banking research institutes at the central level and certain regions	2006
2.	Phase implementation of international best practices
	a.	25 Basel Core Principles for Effective Banking Supervision	2004-2013
	b.	Basel II	beginning 2008
	c.	Islamic Financial Service Board (IFSB) for sharia banks	2005-2011