Indonesia central bank looks to slash zeroes off its currency notes

Bank Indonesia Governor Agus Martowardojo holding new rupiah notes at an official ceremony in Jakarta on Dec 19, 2016.
Bank Indonesia Governor Agus Martowardojo holding new rupiah notes at an official ceremony in Jakarta on Dec 19, 2016.PHOTO: REUTERS
 A woman holds newly designed rupiah notes after exchanging her old bills at a Bank Indonesia mobile bank in Jakarta on Dec 19, 2016
A woman holds newly designed rupiah notes after exchanging her old bills at a Bank Indonesia mobile bank in Jakarta on Dec 19, 2016PHOTO: REUTERS

JAKARTA (REUTERS) - Indonesia's central bank governor said on Monday (Dec 19) that the bank is seeking to slash three zeroes off the face value of rupiah notes in a move to simplify its currency system.

Bank Indonesia (BI) Governor Agus Martowardojo said he has asked President Joko Widodo to revive a previously shelved plan to re-denominate the rupiah and make it "more efficient and simpler".

A draft law backing re-denomination 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," Mr 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 latest currency designs are for notes that use the current denomination system and 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. But she said the proposal is not on the list of current legislative priorities for 2017.

"A re-denomination would strengthen assurance in Indonesia's currency, but it does not affect anything nominally," she told reporters at a separate event on Monday (Dec 19).