Bailout to Bail-in: An Effort to Overcome The Financial Crisis in Indonesia

Abstract

Bailout is an alternative in handling the financial crisis. The fundamental purpose of bailout policy is for the public interest. This research purposed to find out why the bail-in mechanism replaced the bailout mechanism, an alternative to handling the financial system crisis in Indonesia. In this normative research, the secondary data were used. In order to analyze the data, qualitative data analysis technique was implemented. In conclusion, this research found out that bailout in Indonesia in the case of Bank Indonesia Liquidity Assistance (BLBI) and Century Bank showed bad impacts of bailout implementation mechanism. Based on Law on Prevention and Mitigation of Financial System Crises (UU PPKSK) and its implementing regulation, the systemic bank was now obliged to solve financial problems with its own effort in accordance with action plan they made. This mechanism is called the bail-in mechanism, replacing the bailout policy mechanism in handling the financial crisis in Indonesia.