Bank Indonesia has refloated plans for redenomination, with central bank Governor Agus Martowardojo saying the macroeconomic condition is currently stable and healthy enough to support the shift.
According to the current plan, Bank Indonesia will cut the last three zeroes from the rupiah, making Rp.1,000 instead Rp.1 and so on. The central bank reassures that this will not affect the value of cash.
“This year would be a fitting moment for re-denomination. Compared to 2016, we have been through economic recovery this year,” Martowardojo said, as quoted by Detik.
Martowardojo also said that Bank Indonesia had submitted a regulation on re-denomination two years ago to the National Legislation Programme. The bill has not been revisited in that time while the bank prioritises urgent regulations and laws on state revenue.
“Re-denomination will positively affect Indonesia’s economic reputation and will make the currency circulation more efficient. The bill only consists of 18 articles and we hope that the authorities will put a consideration on it,” Martowardojo said.
The transition period is likely to take around seven years, he predicted.
Dody Waluyo, Executive Director of Bank Indonesia’s Department of Economic and Monetary Policy, said the transitional period will be necessary to ease the change for the public.
“Redenomination does not mean that the value of the money will be cut. There will be two equal currency in the transitional period. One is the old version of Rupiah, and the other is the re-denominated one,” Waluyo said.
Bank Indonesia is ready to discuss the bill but must wait on the central government and the House of Representatives, but hopes it is done sooner rather than later.
“The best timing for redenomination was two years ago, when the national macroeconomic condition, economic growth and inflation condition was great,” Waluyo said.
See: Bank Indonesia To Cap Foreign Banknotes Entering Country
Image credits: Tempo
