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Expressed strong systemic risk if other institutions will be eroded strong. Century Bank case like a hot ball that is ready to eat the victim. Government measures to save banks related to this worthy cause controversy is whether the bank was saved. One of the sticking out of the controversy is about whether or not systemic effects of this bank bail-out when done.

For the government, the threat of systemic risk that is a cause for courage pour injection of Rp 6.7 trillion. The goal, so this bank failures if the closing does not create systemic risk, which is spread to other banks that made the financial system collapsed.

In essence, a complex system will have a risk of systemic failure in which a spreading and damaging the entire system. Therefore, what can be done in a case like this only reduces the complexity of the system. Systemic risk can not be detected and he emerged from an unexpected interaction between the parts in a system.

In terms of risks to the financial system, risk management can only anticipate a problem under normal circumstances where the behavior of other banks can be predicted. In a state of crisis, change too quickly can cause the banks to behave out of character.

Expressed strong systemic risk if other institutions are fundamentally strong and will be eroded significantly affected. In these circumstances, the circulation of money will decline, while each bank will strive to improve liquidity.

To obtain liquidity, the bank urged creditors to pay off more quickly, and the condition will be exacerbated by the behavior of customers withdrawing their savings in a panic.

In 2008, systemic failure of financial systems in the United States that caused the impeachment of one of the largest companies in the world, Lehman Brothers. The failure of these companies turned out to cause systemic failure in the country.

However, others assert a fact, that during the months of January to December 2009, more than 100 banks have closed in the country, but does not cause systemic risk. That is, an institution too big to fail was the one who will take effect / systemic risks. Or it can be said that only certain banks that will go bankrupt if left systemic impact.

Among the banks that systemic risk is a multinational bank. Financial institutions that have a lot of networking with other banks, if allowed to go bankrupt, would leave a large amount of debt to other banks.
However, the problem is the determination of a financial institution of systemic risk is that the status is determined after the crisis occurred.

The question, whether the Bank Century, like Lehman Brothers that could cause systemic risk as the government feared that time until the funds amounting to Rp 6.7 trillion just poured?

To answer that, to be seen with the investigative audit on the placement of funds with other banks in the Bank Century and vice versa in various forms (interbank loans, commercial paper, stocks, bonds, etc.).

However, the obvious fact that earned a third-party funds (DPK), which is owned by Century Bank is only 0.08 percent of total banking deposits. In addition, the credit disbursement is only 0.72 percent of the total, and total assets of only 0.72 percent of total banking assets.

So, not surprisingly, Kwik Kian Gie said that it was impossible if the failure of Century Bank will have a systemic impact. Though Bank Indonesia has set a Century Bank as Bank of systemic failure that affects the Governor of Bank Indonesia No. 01/232/GBI/Rahasia dated 20 November 2008, strengthened by KKSK meeting on 21 November 2008 by Decree No. 04/KSSK/2008.

Meanwhile, the CPC audit, which refers to the contents of the Memorandum of Understanding on Cooperation between the Finacial Supervisory Authorities: On Cross-Border Financial Stability (EU MoU) as of June 1, 2008, contained four aspects as the basis for determining systemic effects, ie aspects of financial institutions, financial markets, payment systems and the real sector. All four must be measured by quantitative indicators.

Thus, according to the CPC, Century Bank has only low to medium impact on the national banking industry, and the BI and the government's decision based on qualitative considerations.

In addition, BI is considered inconsistent with the Memorandum of Understanding for consideration mamasukkan aspects of market psychology. This makes BI Bank concluded that the case would affect systemic Century, which can trigger a disruption in the financial markets and payment systems.

But the government and the Bank asserted warned that market psychology aspect refers to the 1997/1998 crisis experience. At that time, the closure of 16 banks that market share is only 2.3 percent of total banking assets, it caused a chain effect that triggered the banking crisis.

Problem of systemic risk and the Bank Century, seems to be a problem long enough to be discussed. Somehow committee questionnaire results Century Bank is the case, would only politically charged or were able to overcome the real problem.

Yet to overcome these systemic risks, which required only a policy of prevention through regular assessment of whether a bank included in the category of systemic risk or not. If it is not so, then the bank's size must be reduced to not threaten the system if the bank went bankrupt.

That requires government intervention, so that banks are too big too fail can be split into several smaller banks more competitive and efficient, this needs to be done to minimize moral hazard by bank owners are too big too fail.

In addition, there is need for accountability to the troubled institutions. Creditors / depositors should also be prepared to lose some of their savings. Thus, the use of public money should not be used at random, and need to pay attention to the social benefits outweigh the costs borne by society.

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