FINANCIAL SYSTEM STABILITY AND ROLE OF OJK
The establishment of OJK as an integrated financial services sector supervisor is a strategic step in strengthening Indonesia's financial system architecture. OJK's presence is intended to ensure that all activities in the financial services sector can be conducted in an orderly, fair, transparent, and accountable manner, and capable of creating a sustainable and stable growing financial system. Through integrated supervision, OJK plays an important role in maintaining public trust in the financial system and protecting consumer interests.
Various financial crises have shown that fragmentation in financial sector supervision can impede early detection of systemic risk and slow down necessary policy responses. The increasing complexity of financial products and services, along with growing interconnectedness between financial institutions, requires a comprehensive and integrated supervisory approach. OJK exists to address these challenges by carrying out regulatory and supervisory functions covering all financial services sectors, from banking, capital markets, to non-bank financial industry.
OJK as the financial services sector supervisor has a special interest in maintaining financial system stability related to its function in microprudential supervision and consumer protection in the financial services sector. This role becomes increasingly critical given the growing integration of the global financial system and the increasing complexity of risks faced by financial institutions.
In implementing its mandate and authority to maintain Financial System Stability, OJK has several legal frameworks as follows:
Law No.21 of 2011 concerning the Financial Services Authority
Law No.9 of 2016 concerning Prevention and Handling of Financial System Crisis
Law No.4 of 2023 concerning Financial Sector Development and Strengthening (PPSK Law)
OJK establishes and implements supervision of the financial services sector through three main approaches. First, strengthening financial institutions' resilience through enhancement of capital, liquidity, and risk management. Second, promoting sound and sustainable business practices by strengthening governance and transparency. Third, protecting consumer interests through regulations that support consumer protection and financial education.
In carrying out these duties, the law grants OJK six main authorities to conduct:
Regulation and supervision of banking and capital market sectors, including monitoring bank health and systemic risk evaluation;
Supervision of derivative financial sector, carbon exchange, and digital assets, including trading platform supervision and technology risk evaluation;
Regulation and supervision of non-bank financial industry sector, including insurance, pension funds, and financing institutions;
Consumer protection in the financial services sector through regulation and education;
Law enforcement in the financial services sector to ensure regulatory compliance; and
Coordination with relevant authorities in maintaining financial system stability, including coordination with Bank Indonesia in macroprudential aspects and the Deposit Insurance Corporation in handling troubled banks.
OJK also plays an active role in coordination forums with relevant authorities, particularly in the Financial System Stability Committee (KSSK), to ensure maintained financial system stability. This coordination includes information exchange, joint analysis of potential risks, and development of coordinated policies to prevent and handle crises. Through this comprehensive and integrated approach, OJK continues to strengthen the national financial system and support sustainable economic growth.
