INDONESIA’S central bank governor said on Monday the bank is seeking to slash three zeroes off the face value of rupiah notes in a move to simplify it currency system.
Bank Indonesia (BI) 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 under the previous government. However, the draft was put aside due to instability in Indonesia’s financial markets at the time.
If parliament approves a revived bill next year, the central bank would need two more years to prepare new notes. It would then need another seven-years of transition before it could fully remove three zeroes from the currency, he said.
“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,” Martowardojo said at the launch of a new series of designs for the physical currency.
The largest rupiah denomination is currently 100,000 and the smallest note is 1,000. The central bank’s new currency designs will be for notes that use the current denomination system and will feature images of historic Indonesian figures.
Indonesian Finance Minister Sri Mulyani Indrawati said the rupiah’s many zeroes reflected the currency’s inflation history and that she would discuss the proposal with parliament with a view to introducing it next year. However, she said the proposal is not on the list of current legislative priorities for 2017.
“A redenomination would strengthen assurance in Indonesia’s currency, but it does not affect anything nominally,” she told reporters at a separate event on Monday. – Reuters