Indonesia Resurrects Currency Redenomination Plan

Historical Context and Current Developments

The Indonesian government has revived the long-dormant plan to redenominate the rupiah currency, a proposal that has been in discussion since 2010 ¹

. The redenomination plan, which involves removing three trailing zeros from the currency (e.g., Rp1,000 becoming Rp1), is now part of the Ministry of Finance's strategic plan for 2025-2029 ²

Source 2

https://finansial.bisnis.com/read/20251108/11/1927126/asa-redenominasi-rupiah-dari-era-darmin-hingga-purbaya

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Objectives and Expected Outcomes

The proposed redenomination aims to achieve four primary objectives:

1. Enhance economic efficiency through improved national competitiveness
2. Maintain economic stability and continuity
3. Preserve currency value and purchasing power
4. Boost currency credibility in international markets

Implementation Challenges and Considerations

While the plan has been revived, its implementation faces several challenges. Previous attempts at redenomination were postponed due to both global and domestic economic uncertainties ¹

. The current global economic landscape, still recovering from the COVID-19 pandemic, adds another layer of complexity to the proposal.

Previous Attempts and Lessons Learned

The redenomination plan has been discussed for over a decade, with previous governors of Bank Indonesia, such as Darmin Nasution and Agus Martowardojo, supporting the initiative ¹

. However, the process was repeatedly delayed due to unfavorable economic conditions. The Ministry of Finance, under different leadership, has consistently included redenomination in its strategic plans, demonstrating a continued commitment to the idea.

Current Status and Future Prospects

The Ministry of Finance, led by Minister Purbaya Yudhi Sadewa, has now included the Redenomination Bill in its 2025-2029 strategic plan, with a target completion date of 2026 ²

. The successful implementation of this plan will depend on various factors, including economic stability and political consensus.