Indonesia's Currency Redenomination Plan Faces Challenges

Legislative Process and Timeline

The Indonesian government's plan to redenominate the rupiah is encountering significant delays due to concerns raised by the DPR's Budget Committee (Banggar). The process is now expected to take 7 years after the legislation is passed ¹

. Chairman of Banggar, Said Abdullah, emphasized that the redenomination process won't be rushed and will require comprehensive preparation.

Economic Concerns and Technical Readiness

The main concerns revolve around the potential economic impact and technical readiness. Said Abdullah highlighted that redenomination is not just about removing three zeros from the currency, but has significant consequences for economic stability if not properly prepared ¹

. The government is particularly concerned about potential price rounding that could lead to inflationary pressures.

Roles of Key Institutions

The redenomination process will involve multiple key institutions:

1. Bank Indonesia (BI): As the central bank, BI will be responsible for implementing the redenomination
2. Ministry of Finance: Led by Minister Purbaya Yudhi Sadewa, the ministry is overseeing the policy
3. DPR (Indonesian Parliament): Will need to pass the redenomination law

Implementation Strategy

The government has outlined a phased implementation approach considering political, economic, and social stability, as well as technical readiness. Bank Indonesia's Head of Communication Department, Ramdan Denny Prakoso, emphasized that the redenomination will not affect the currency's purchasing power or exchange rate ¹

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Public Education and Financial Literacy

A crucial aspect of the redenomination process is public education and financial literacy. The government recognizes the need to ensure that the public understands the difference between redenomination and currency redenomination or 'sanering'. This education process is seen as critical to preventing public misunderstanding and potential panic.