As we have discuss earlier, banking crimes are serious problems, but how about the clients warranty, is their money safe and able to be withdrawn? Lets find out below.
Given the bank is an institution, the trust then the supervisory functions that exist in all banks is to develop a mechanism of protection of bank customers. This is what is lacking in the banking system in Indonesia. Actually, not only in Indonesia, even a country the size of the U.S. also recently developed a specific institutional banking supervision for the protection of customers. Without it the competitiveness of the banking system in the U.S. will suffer a setback, especially the economic crisis continues to haunt the country’s economy.
In many cases that often happens in develop country, customer protection system is still not well institutionalized. So do not be surprised if any adverse appearance of fraud cases bank customers, who blamed and punished the bank, rather than focus their efforts on customer protection.
In a competitive economic system, based on the Theory of Calabresi and Heath, Jarrow, and Morton, the cost of compensation to minimize losses due to banking crimes should still be. It does not matter, whether it is paid by the bank concerned, insurance, customer protection agency, or even the government budget.
This is where the importance of customer protection which must be well organized so that coordination of payment will result in economies of scale, as described by Scott Dressler. Dressler, in the Economies of Scale in Banking, Confidence Shocks, and Business Cycles prove the importance of economies of scale in creating public confidence due to pressures of the business cycle.
Public trust that is not fundamentally affect the banking intermediary function, necessitating the intervention of monetary authorities with monetary policy approach. However, monetary policy will only be effective if the information provided is perfect.
Economies of scale in the banking world will not be effective in addressing the crisis of confidence if the information is not available either. With the information that is not symmetric then the public will get a bad signal, so that the public was getting the banks that actually the quality is also bad. This is where the role of monetary authorities to disclose information to the public about the banks that do not pay the compensation due to crimes committed by the employees themselves.