Indonesia’s central bank governor said yesterday that the bank is seeking to slash three zeros off the face value of rupiah notes to simplify its currency system.
Bank Indonesia Governor Agus Martowardojo said he has asked President Joko Widodo to revive a previously shelved plan to redenominate the rupiah to make it “more efficient and simpler”.
A draft law backing redenomination was submitted to parliament in 2013, but it was put aside due to instability in Indonesia’s financial markets then
If approved, the central bank would need two years to prepare new notes and another seven years of transition, Mr Martowardojo s.aid.
“Prices of goods and services have to also be simplified. Because of the transition period, in which people can use both the old and new rupiah denominations, we are sure it wouldn’t affect inflation,” he said at the launch of a new series of new currency designs.
The largest rupiah denomination is currently 100,000 and the smallest is 1,000.
Indonesian Finance Minister Sri Mulyani Indrawati said she would discuss the proposal with parliament. However, it is not on the list of current legislative priorities for next year.
“A redenomination would strengthen assurance in Indonesia’s currency, but it does not affect anything nominally,” she told reporters.
