Author Topic: Indonesia: Currency Reform Soon?  (Read 6252 times)

0 Members and 1 Guest are viewing this topic.

Offline Bimat

  • आदित्य
  • Global Moderator
  • Honorary Member
  • *****
  • Posts: 11 371
  • Mumbai, India.
Indonesia: Currency Reform Soon?
« on: December 07, 2011, 01:50:44 PM »
According to article in Bernama, Indonesian government is thinking of a currency reform in 2012. If the proposal is accepted, old 1000 Rupiah will become new 1 Rupiah. The redenomination will be implemented for five to ten years. (I'm not sure if I've understood this statement properly ???)

Aditya
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Online <k>

  • Moderator
  • Honorary Member
  • *****
  • Posts: 20 129
Re: Indonesia: Currency Reform Soon?
« Reply #1 on: December 07, 2011, 01:59:44 PM »
"BI had earlier announced that the rupiah redenomination would be carried out in four stages over a period of 10 years to minimise public confusion."

No - that will MAXIMISE confusion!  ;D


Offline chrisild

  • Honorary Member
  • *****
  • Posts: 8 458
  • NW · DE · EU
Re: Indonesia: Currency Reform Soon?
« Reply #2 on: December 07, 2011, 02:45:19 PM »
Ten years sounds like an awfully long period of time for such a reform. But the proposed "stages" (at the end of the article) make a little more sense:

* information campaign to alert the public (2011- 2012)
* transition period (2013-2015)
* gradual withdrawal of the old rupiah (2016-2018)
* and the use of the new rupiah (2019-2020)

My assumption is that they plan to introduce the new denominations one by one ...

Christian

Offline andyg

  • Global Moderator
  • Honorary Member
  • *****
  • Posts: 3 456
  • DERBYS · UK
Re: Indonesia: Currency Reform Soon?
« Reply #3 on: December 07, 2011, 07:17:39 PM »
By the time they have done that little lot, inflation will have rendered everything worthless..... :-\
always willing to trade modern UK coins for modern coins from elsewhere....

Offline ciscoins

  • Senior Member
  • ***
  • Posts: 341
    • Coins of CIS and Baltic countries
Re: Indonesia: Currency Reform Soon?
« Reply #4 on: December 07, 2011, 11:15:21 PM »
* transition period (2013-2015)

Three years? What for? I remember the redenomination in Russia in 1998: The new coins and banknotes were put into circulation at 4th or 5th of January. The old ones could continue circulating until 31st of December, but everyone was trying to get rid of them; so they completely disappeared already in May. Four months were enough to displace the old coins with the new ones.
Ivan
Moscow, Russia

Offline augsburger

  • Meritorious Member
  • ****
  • Posts: 730
Re: Indonesia: Currency Reform Soon?
« Reply #5 on: December 08, 2011, 12:33:46 PM »
Perhaps the transition period is all about being able to hand currency in. The Euro came in in Spain within 3 months and the Peseta was completely gone after that period!

Offline chrisild

  • Honorary Member
  • *****
  • Posts: 8 458
  • NW · DE · EU
Re: Indonesia: Currency Reform Soon?
« Reply #6 on: December 08, 2011, 01:47:31 PM »
Hmm, in Spain (as in the other ten original euro countries) the transition period was more than three years, not just three months. Then again, merely chopping some zeros off should actually not take several years ...

Christian

Offline Figleaf

  • Administrator
  • Honorary Member
  • *****
  • Posts: 29 264
Re: Indonesia: Currency Reform Soon?
« Reply #7 on: December 11, 2011, 10:11:20 PM »
Keep in mind that Indonesia consists of thousands of islands, some pretty isolated. During the second world war, some Dutch sailors were washed up on an island where people were just that day celebrating the birthday of king William III, who had died in 1890...

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline Bimat

  • आदित्य
  • Global Moderator
  • Honorary Member
  • *****
  • Posts: 11 371
  • Mumbai, India.
Indonesia: Currency Reform Soon?
« Reply #8 on: December 12, 2011, 04:08:31 PM »
The current series of Indonesian coins is pretty good IMO, I hope it remains the same (or becomes better) after reform too! :)

Aditya
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Offline giladzuc

  • Member
  • **
  • Posts: 51
    • GILAD ZUCKERMAN COINS COLLECTION - KUMPULAN MATA-MATA UANG
Re: Indonesia: Currency Reform Soon?
« Reply #9 on: December 21, 2011, 04:15:32 PM »

Offline Bimat

  • आदित्य
  • Global Moderator
  • Honorary Member
  • *****
  • Posts: 11 371
  • Mumbai, India.
Indonesia: Currency Reform Soon?
« Reply #10 on: January 25, 2013, 11:14:49 AM »
Govt officially starts currency redenomination campaign

The Jakarta Post, Jakarta | Headlines | Fri, January 25 2013, 11:32 AM

The government officially started its campaign to strike off three zeros from the rupiah on Wednesday, with top officials expressing their optimism that the “redenomination” would make the economy more efficient without sparking inflation.

At its current rate of around 9,700 per US dollar, the rupiah appeared to be among the world’s weakest currencies but its value did not accurately reflect the country’s strong economic fundamentals, Finance Minister Agus Martowardojo said.

“A currency that has too many digits brings complexity to calculations and economic transactions, potentially causing mistakes and ineffectiveness [during the computation process],” the minister said during the redenomination public hearing in Jakarta.

The government has included redenomination as one of the priority bills to be discussed in the House of Representatives (DPR) this year.

If the bill is passed into law, Rp 1,000 will become Rp 1 but the banknote’s purchasing power will remain the same.

A transition period is slated for 2014. This means in 2014, Indonesians will have two types of banknotes circulating in the market: the existing banknotes and those with three zeros omitted.

During the transition period, all shops and businesses will have to use dual pricing; before and after the redenomination.

The process will take between four and six years, meaning the old banknotes should be withdrawn by 2018.

It would be necessary for the public to know that the redenomination was different from the currency policy implemented in the 1960s, known as sanering, Agus said. The minister explained that, while sanering cut both the nominal value and the exchange (economic) value of the currency, redenomination would leave people’s purchasing power unaffected.

Nevertheless, the government’s plan to delete three zeros has been criticized by some parties, including Chairul Tanjung, the chairman of the President’s National Economic Committee (KEN), who argued that the redenomination was unnecessary and should not be a priority.

Delivering his keynote speech at the redenomination public hearing, Bank Indonesia (BI) Governor Darmin Nasution took time to hit back at critics.

“Those saying redenomination is not necessary, arguing that there is no price shock yet in Indonesia, are mistaken,” he said.

Darmin explained that a redenomination policy could only be successful if it was implemented at a time when a country possessed both stable inflation and strong macroeconomic fundamentals — as Indonesia has at present.

The central bank is also confident that the redenomination policy will not trigger inflationary pressure.

The money supply would stay at the same level despite the fact that there would be two types of banknotes during the transition period in 2014, a BI official said.

“If I need to print 1 million Rp 100,000 notes, then during that time I only need to print a half a million in that form, while another half will be printed in the form of Rp 100. The amount of banknotes circulating in the market, therefore, will remain unchanged,” BI Deputy Governor Ronald Waas said on Wednesday.

Source: The Jakarta Post
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

translateltd

  • Guest
Re: Indonesia: Currency Reform Soon?
« Reply #11 on: January 25, 2013, 09:10:56 PM »
“If I need to print 1 million Rp 100,000 notes, then during that time I only need to print a half a million in that form, while another half will be printed in the form of Rp 100. The amount of banknotes circulating in the market, therefore, will remain unchanged,” BI Deputy Governor Ronald Waas said on Wednesday.

The idea of actually continuing to print "old" rupiah alongside the "new" ones is quite bizarre - that doesn't encourage the phasing-out part of the process at all.


Offline Harald

  • Senior Member
  • ***
  • Posts: 333
    • Monetary History & Numismatic Linguistics
Re: Indonesia: Currency Reform Soon?
« Reply #12 on: January 27, 2013, 08:44:36 PM »
The idea of actually continuing to print "old" rupiah alongside the "new" ones is quite bizarre - that doesn't encourage the phasing-out part of the process at all.
Also from cost point of view, it's nonsense. Why produce new banknotes which are demonetised by the end of the year?

Maybe the Jakarta Post should have asked the Governor instead of the Deputy Governor  ;D

cheers
--
Harald
http://www.liganda.ch (monetary history & numismatic linguistics)

Offline Bimat

  • आदित्य
  • Global Moderator
  • Honorary Member
  • *****
  • Posts: 11 371
  • Mumbai, India.
Indonesia: Currency Reform Soon?
« Reply #13 on: August 26, 2017, 09:38:11 AM »
The proposal is not yet dead... ;D

Indonesia: Govt moves for redenomination of currency

By Aisyah Llewellyn | 25th August 2017   

WHEN tourists in Indonesia change money for the first time, they often get quite a shock.

Even changing a small amount of currency, in the region of US$100, means you will end up with a large wad of banknotes totaling around IDR1,335,774, becoming a millionaire in the process.

As of August 2017, US$1 amounts to around IDR13,357, but a fat wallet stuffed with millions of rupiah may soon become a thing of the past. The Indonesian government is now making moves for redenomination of the currency, which may shave up to four zeros off the rupiah.

The proposal comes from Bank Indonesia, but the government is supporting the redenomination Bill with Coordinating Economic Minister Darmin Nasution leading the charge. There is widespread support in the government for the Bill although Nasution has explained it is yet to be seen how it will be rolled out.

He said: “We have not decided yet whether we will scrap three or four zeroes from the rupiah… If three zeroes are removed, [the resulting figure] is familiar to many people; if you eat at a restaurant and see 40.00 on the menu, that means the price is IDR 40,000 [US$3].”

At the moment, the Indonesian rupiah is one of the least valuable currencies in the world, with coins ranging from IDR100 to IDR1,000 rupiah and notes from IDR1,000 to IDR100,000 rupiah.

The rupiah is also a relatively new currency in global terms and was only recognized as official currency in 1949 even though the first bank notes were printed in 1946.

The first form of currency in Indonesia appeared in around the ninth century when beads were used to make transactions. It wasn’t until the 12th century that gold and silver coins were put into circulation. The first banknotes, called “duit“, were printed by the Dutch East Indies Trading Company. When the Dutch became an official colonial power in the 1800s, they in turn introduced the gulden.

With the occupation of the Japanese during the World War II, however, Dutch banks were suppressed and the Japanese printed their own version of gulden before switching to a different version once independence began to seem like a serious prospect.

This was printed in Indonesian and called the Netherlands Indies roepiah which was arguably an early version of the rupiah used in Indonesia today. After independence in 1945, Indonesians refused to use gulden and phased out Netherlands Indies roepiah in favor of printing their own bank notes.

Now, with the idea of redenomination looming, Indonesian rupiah may change form once again. However, it is not the first time the idea of removing a few zeros from the currency has been discussed. In 2010 Indonesia looked at redenomination, but plans were put on hold due to worries that macroeconomic conditions were not stable enough.

For many Indonesians, however, the move is long overdue and the rupiah has become a source of international embarrassment. According to Darmin Nasution: “It’s for efficiency and also, a matter of prestige … Ask foreign tourists who exchanged US$300 for piles of rupiah banknotes,” he said. “They might have thought ‘What kind of country is this?’”

But not everyone is in a rush to give the rupiah a makeover. After all, when former president Sukarno suddenly devalued the rupiah by 75 percent in 1959, it caused a widespread backlash as many Indonesians refused to accept the devalued bank notes.

This fed into much of the political turmoil of 1965, making many Indonesians wary of any changes to the currency, even though denomination and devaluation are different things entirely.

Critics in the current government include Fadli Zon who is a deputy speaker in the House of Representative for the opposition Gerindra Party, “The government should focus on reigning in the budget deficit” [which is approaching the three percent legal limit],” he said.

Despite Fadli’s worries, however, this seems as good a time as any to make the change to the rupiah, with Bank Indonesia governor Agus Martowardojo at pains to stress the positives of the current Indonesian economy, “Indonesia is economically and politically stable… This initiative is good for the economy. But of course, it will take years, as Indonesia is a large country and people have different levels of education.”

How many years is it likely to take exactly? Well, if Indonesia decided to remove three zeros from its currency tomorrow, the initial period of transition would take between one and two years. This would then probably be extended to around six or seven years to allow businesses to adjust to the move and for the old rupiah notes to be phased out of circulation completely.

Importantly, the move to redenomination will not affect the value of the rupiah. It will just be a way to make it simpler for both locals and visitors alike as well as play a strategic role in restoring national pride in the currency.

While many Indonesians may not have to explain the wayward zeros on their banknotes to tourists, for some employees at the front lines such as Indra Nugroho, who works in a bank in Jakarta, the rupiah has become an increasingly thorny issue: “Our money has been an object of ridicule for a long time and we are rather ashamed.”

Source: Asian Correspondent
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Offline Figleaf

  • Administrator
  • Honorary Member
  • *****
  • Posts: 29 264
Re: Indonesia: Currency Reform Soon?
« Reply #14 on: August 26, 2017, 05:48:07 PM »
Simple solution, borrowed from Hungarian hyper-inflation times: denominate banknotes in R-rupees. The R stands for ribu, the bahassa word for thousand. A 5000 rupee note would become 5 R-rupee, a 10 000 rupee note would be 10 R-rupees. Very simple to explain and it would do the same as deleting 3 zeroes.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.