Kompas TV: Indonesia Plans to Redenominate the Rupiah: A Strategic Financial Move

Understanding Redenomination

Redenomination involves changing the face value of currency without affecting its actual purchasing power. In Indonesia's case, this means simplifying the rupiah's denomination, which currently has a high number of digits, making transactions cumbersome.

The Indonesian government aims to enhance economic efficiency through this process, which is outlined in the Minister of Finance Regulation number 70 of 2025. The plan is not merely cosmetic; it is intended to bolster the credibility of the rupiah and modernize the national payment system.

Stakeholder Involvement and Legislative Process

The Head of the Communication Department at Bank Indonesia, Ramdan Deni Prakoso, emphasized the importance of thorough discussions involving various stakeholders before implementing the redenomination. Although a specific start date has not been announced, the plan has been included in the national legislative program for the 2025-2029 medium term.

The collaboration between Bank Indonesia, the government, and the House of Representatives will be crucial in drafting the necessary legislation and ensuring a smooth transition. This process is expected to take two years, with a target completion date set for 2027.

Challenges and Preparations Ahead

Experts like Bima Yudistira from the Center of Economic and Law Studies warn that successful redenomination requires extensive preparation. He suggests that a timeline of 8 to 10 years may be necessary to ensure proper socialization of the changes, particularly since approximately 90% of transactions in Indonesia still rely on cash.

Bima's insights highlight the importance of public understanding and acceptance of the redenomination process to avoid pitfalls experienced by other countries, such as Brazil and Zimbabwe, where similar efforts failed. A well-prepared approach could mitigate risks and foster a smoother transition.

Sources: Penjelasan BI soal Rencana Redenominasi Rupiah; https://www.youtube.com/watch?v=fYKWtWyt9nw