"It will take six to 12 years to produce new bills."Jakarta (ANTARA News) - Indonesia`s Rp100,000 banknote is the second highest currency denomination among members of the Association of Southeast Asian Nations (ASEAN) after Vietnam`s 500,000 dong note, Bank Indonesia (BI/the central bank) Governor Darmin Nasution said.
He said that the high denomination of rupiah suggested that it had a low value.
Therefore, Indonesia is planning to re-denominate its rupiah currency by imposing a three-digit cut or omitting three zeroes on the rupiah bill.
Thus, the re-denomination of a Rp1,000 note would have its three zeroes taken off to become Rp1, yet its value would remain the same.
According to Darmin, the third highest currency denomination in the region is that of the Lao kip (50,000), followed by Cambodian riel (100,000), Myamarese kyat (5,000), Philippine peso (1,000), Thai baht (1,000) and Malaysian ringgit (100).
Besides, the exchange value of the rupiah against the US dollar does not reflect the strong economy of Indonesia. The rupiah`s value against the US dollar is too low compared with the exchange values of other currencies in the ASEAN region.
He said that the rupiah`s value against the US dollar on January 21, for example, was Rp9,788 per US$1, while the values of Malaysian ringgit, Philippine peso, Singaporean dollar and Thai baht against the US dollar were MYR 3.05, PHP 41.92, SGD1.23 and THB30.52, respectively.
Therefore, Darmin said, the government had decided to continue with its plan to redenominate the Indonesian currency. He added that the government was also certain that implementing the plan would not lead to inflation.
The central bank`s governor said here on Wednesday the government is certain that implementing this plan will not lead to inflation.
"We can understand if there is an excess or a shortage of money in circulation. If there is an excess of money in circulation, we will withdraw. We have the right mechanism in place," he said.
The governor of the Bank Indonesia said in the midst of uncertainty in the global market, the country`s national economy has grown significantly in the past few years.
He said the national economy had grown beyond six percent in the past three years. During this time, the rate of inflation had decreased. The Indonesian currency rupiah had been relatively stable.
He said significant economic growth will be accompanied by an increase in the amount of financial transactions.
"The re-denomination plan will work," he said.
Darmin said a study on currency re-denomination had been carried out in 2007. The study focused on the experiences of other countries with regard to currency re-denomination.
He said the implementation of the plan will take between six to 12 years.
"It will take six to 12 years to produce new bills," he said.
Darmin said the programme will be structured in three phases. The first stage will include drafting of the re-denomination bill, printing money and distributing it, and adjusting infrastructure and information systems of payment and familiarisation.
The next stage will be a transition stage, where two bills (old and new) will be used. "This will take two to three years," he said.
The final stage will ensure that the new rupiah bill is the only bill in circulation, he said.
(Uu.A014/O001)
Editor: Priyambodo RH
Copyright © ANTARA 2013
