Principle-Based Regulation in Indonesia: in Response to Digital Age Toward Financial Services

Abstract

After the advent of digital technology, today's financial services have grown in importance. Part of the innovation disruption is the digitization of technology at the start of the industrial era 4.0. In the financial services industry, where access to the financial industry needs to move quickly, sophisticated, and useful to satisfy people's demands, innovation cannot wait for tomorrow. The regulation requirement for financial services inspired by the digital era must move fast to keep up with the times, even though Indonesian legislation must go through a lengthy bureaucratic procedure. In this case, law reform in the financial services sector is needed to respond to digital developments. This research is normative juridical research with the statute, conceptual, and comparative approaches. This study aims to apply the application of principle-based regulations to legal reform in the financial services sector in response to the digital era. This issue has been discussed in the United Kingdom since the financial crisis and implemented along with the rule-based regulations. In Indonesia, this issue has been implemented in institutional-level regulations, for example, Bank Indonesia Regulations in Payment System. However, efforts should be made to adopt these principles into all arrangements related to the financial services sector. This is because the regulations that are still valid in Indonesia are dominated by a rules-based system of regulations.