Implementation of the Precautionary Principle within Prerogative Power to Overcome the Threat of Financial Crisis

Abstract

A crisis or depression, one significant unfortunate event, often happens without warning or preparation and cannot be ignored. Likewise, the threat of a financial crisis is a risk that concerns dangers in a state's economic and political stability. A financial crisis may cause a market and public panic that brings irrational actions. If not prevented or mitigated immediately, a financial crisis can cause a state’s economic and political stability to collapse. It becomes very dangerous if the state does not have normative rules governing financial crisis prevention and mitigation. In this case, the president, as the head of the executive, must take a prerogative power to prevent or mitigate the financial crisis. This is the background of why a precautionary principle is needed in prerogative power when dealing with a financial crisis. The precautionary principle is used to deal with emergency hazards in the environmental fields, but lately, it has been widely used in many fields, including biotechnology and health. In general, the precautionary principle is understood as making decisions in encountering threats or situations that are dangerous and uncertain. With the background of Indonesia’s empirical experience in overcoming the financial crisis of 1997-1998, this article will focus on the notion of implementing the precautionary principle within prerogative power and its prospects to overcome the threat of financial crises.

Keywords: banking crisis, financial crisis, precautionary principle, prerogative power, state of emergency

DOI: 10.7176/JLPG/105-10

Publication date: January 31^st 2021