Governance in Central Banks: A Comparative Study of the Domestic and Foreign Banks

Abstract

In every developing country, the availability of capital for development as a whole is experiencing difficulties and to overcome it, one of the sources of funding for the state is through foreign investment. In 2017, there were 40 banks owned by foreign banks in Indonesia. The research was conducted using a normative-legal research method. The research site was conducted at Bank Indonesia as Central Bank. The results show that the institutional situation of the central bank in the public sector varies from country to country, depending on historical, social and cultural factors. The presence of foreign banks in Indonesia cannot be separated from the State’s goals which have been philosophically affirmed in the Preamble of the 1945 Constitution, to protect the Indonesian nation, promote public welfare, educate the nation’s life and participate in world order. However, as it turns out into practice, the reality of the regulation of foreign banks in Indonesia has not shown a tendency to realize the State’s goals because bank regulation is still very minimal and vulnerable to injustice to the state and injustice to the people of Indonesia.

Keywords: Bank; Comparative; Domestic Banks; Foreign Banks

DOI: 10.7176/JLPG/87-13

Publication date:July 31^st 2019