Bank Indonesia (BI) will tighten the flow of foreign banknotes, allowing only licensed institutions to carry an amount equivalent to or exceeding Rp.1 billion (US$75,148), an official announced this week.
The change comes after a survey of banks which import and export foreign banknotes. Results showed the nominal frequency of banknotes carried by banks is Rp.1 billion (US$75,148) over the given timeframe.
On Monday, May 15, the bank said, in accordance with regulations, legal banking and foreign exchange businesses are considered licensed entities to carry Rp.1 billion.
Budianto, Executive Director of BI’s Foreign Exchange Management Department, said other money management companies registered with BI can also carry foreign notes above Rp.1 billion but only as the recipient of an order from a licensed entity.
Although the regulation was issued May 5, a ten month transition period will ensure all parties are ready when it takes effect March 5, 2018.
Institutions and individuals without the BI permit found to be carrying foreign banknotes exceeding the limit, the Directorate General of Customs at the Ministry of Finance will seize the cash. This sanction will take effect two months after the enactment, on May 5.
Budianto said the restriction is aimed at maintaining stability of the rupiah exchange rate. An increase of inflows and outflows of foreign banknotes worth above Rp.1 billion had contributed to suppressing the rate.
The restriction will also allow BI to compensate for insufficient instruments and data monitoring of inflow and outflow movements and help in stronger monetary policy formulation.
Rudi B. Hutabarat, Director Head of BI’s Department of Foreign Exchange Management, said BI will soon coordinate with custom authorities to monitor cash flow through customs.
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Image credits: birmingham-mint
