Perpustakaan Digital ITB

The banking sector plays a central role in Indonesia’s economy as a financial intermediary, a key transmission channel for monetary policy, and a pillar of financial system stability. The dominance of banking assets, coupled with the growing complexity of digitalization and intraday liquidity risks, necessitates a more robust and responsive supervisory governance framework. Since the transfer of supervisory authority from Bank Indonesia to Otoritas Jasa Keuangan under Law No. 21 of 2011, questions have emerged regarding the effectiveness of the current institutional design. These concerns are particularly salient in the context of fragmented authority among Bank Indonesia, Otoritas Jasa Keuangan, and Lembaga Penjamin Simpanan, as well as the increasing need for real-time data integration across institutions. This study is motivated by the rapid digitalization of the financial sector, the integration of real-time payment systems, and the increasing complexity of intraday liquidity risks, all of which call for stronger governance in banking supervision in Indonesia. Within a multi-authority governance architecture, where microprudential supervision resides with Otoritas Jasa Keuangan, macroprudential policy and payment systems are under Bank Indonesia, and bank resolution is handled by Lembaga Penjamin Simpanan, the primary challenge lies not in the absence of instruments, but in data fragmentation, delays in policy escalation, and the suboptimal integration between intraday liquidity data flows and payment system transactions, as well as stock data on capital and asset quality. This research aims to assess the adequacy of the existing Early Warning System (EWS), formulate enhancements to governance mechanisms, and evaluate their impact on economic, financial, institutional, and policy stability. Using a mixed-methods approach that combines qualitative institutional analysis and quantitative evaluation of risk indicators, this study finds that supervisory effectiveness is not solely determined by the centralization of authority, but rather by the quality of information orchestration and the clarity of escalation protocols. Drawing on a synthesis of network governance and meta-governance theories, as well as international empirical findings from International Monetary Fund and Bank for International Settlements, the study recommends a Hybrid Twin Peaks model based on meta-governance and an integrated Early Warning System (EWS) as the most rational and feasible option in the context of Indonesia as a bank-led economy. This model enables stronger data integration and faster crisis response without requiring radical legal restructuring, thereby maintaining a balance between effectiveness, legitimacy, and governance sustainability. The contribution of this research is both academic and policy-oriented, offering an adaptive systemic orchestration design to strengthen national financial system stability in a gradual and evidence-based manner.