REPUBLIKA.CO.ID, JAKARTA - As government plans to redenominate currency in early 2014, omitting three zeros from IDR, the plan needed at least eight years for transition process, Director General of Treasury at Ministry of Finance, Agus Suprijanto, said.
"If House of Representatives approves Redenimination Draft in 2013, 2014 to 2018 will be a transition period. The redeminonation will take place as early as 2014," Suprijanto said last week.
By 2014, government and Bank Indonesia (BI) will circulate two types of currencies, the present banknotes and the ones with three zeroes omitted. He predicted that in 2019 the central bank would completely withdraw the current banknotes.
The transition period will end in 2022. He claimed that government had studied from several countries successfully implementing redenomination, such as Turkey, Romania, and Poland. Yet, government have also learned from countries failed in conducting redenomination, namely Russia, Argentina and Brazil.
He admitted that government still worried the redenomination could trigger inflation. Yet, Suprijanto explained that redenomination was needed as the current currency created inefficiency in trade. With its big nominal, IDR is currently one of the lowest-priced currency in its exchange rate to USD.
Government has forwarded the plan to the House. Coordinating Minister of Economy, Hatta Rajasa, said government and the House agreed to execute the plan. He highlighted the importance of socializing to public on the difference between redenomination and sanering (reducing the value of money).
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