STRENGTHENING OF ELECTRONIC MONEY REGULATIONS PUBLISHED BY NON-BANK INSTITUTIONS IN INDONESIA IN THE FRAMEWORK OF MITIGATION OF THE RISK OF DAILY PAYMENT DUE TO BANKRUPTCY

Abstract

This article aims to find out: how to protect float funds in payment system regulations in Indonesia and how to optimize the protection of float funds managed by non-bank institutions as issuers of electronic money in the context of mitigating bankruptcy risk. This research will examine arrangements related to float funds managed by non-bank institutions as issuers of electronic money, which have experienced significant growth in recent years in line with the increasing use of digital finance by the public as users. In fact, the growth of float funds managed by non-bank institutions was greater than that managed by banks, namely 69.95% of the total float funds as of June 2020. The significant increase in float funds was also influenced by the implementation of community social distancing as a result of the Covid-19 pandemic which has accelerated the use of digital finance by the public. However, float funds managed by these non-bank institutions do not yet have optimal protection for mitigating bankruptcy risk caused by the moral hazard of management (members of the board of directors and board of commissioners) and owners (controlling shareholders) of non-bank institutions as issuers of electronic money. So that the urgency of protecting float funds through regulatory reform should be a concern, namely the need for insurance protection for float funds, comprehensive fit and proper tests for prospective managers and controlling shareholders of non-bank institutions that issue electronic money, as well as regulations for the use of investment proceeds of float funds. This research is analytical descriptive research and uses a normative juridical approach by prioritizing secondary data analysis in the form of primary legal materials, namely laws and regulations; secondary legal materials both journals and results of previous research; and tertiary legal materials. Furthermore, the data obtained were analyzed qualitatively and juridically. The conclusions from this study: (i) regulatory protection for float funds managed by non-bank institutions as issuers of electronic money to mitigate bankruptcy risk caused by the moral hazard of management and controlling shareholders has not been carried out optimally; (ii) concrete efforts are needed from the regulator to optimize the protection of float funds to mitigate the risk of default due to bankruptcy caused by the moral hazard of management and/or controlling shareholders, in the form of updating legal instruments in the form of insurance protection, a comprehensive fit and proper test process and regulation on the use of investment proceeds of float funds.