Policy Redenomination of the Rupiah It has resurfaced after the Chairman of the LPS Board of Commissioners, Purbaya Yudhi Sadewa, conveyed the plan to simplify the denominations of the national currency. He stressed that this step is not a devaluation of the currency, but a technical adjustment to improve the efficiency of the national financial and payment system.
Purbaya mentioned the target completion of this policy around 2027. The government, together with the monetary authorities, is preparing a range of phases, from adjustments to the payment system and the printing of new money to a public communications strategy to prevent misunderstandings in society.
Background of the Rupiah redenomination
idea Redenomination of the Rupiah Actually, it's nothing new. This discourse has existed for more than a decade, but has not materialized because it takes into account the readiness of the national economy and political stability.
What is the redenomination of the Rupiah?
Redenomination is the simplification of the nominal value of the currency without changing its purchasing power or its real value. For example, Rp1,000 will become Rp1 after redenomination. This change concerns only the number of digits on banknotes and the accounting records system, not the exchange rate or real inflation.
This policy is generally carried out by countries that wish to increase transaction efficiency, improve the perception of the currency's value, and strengthen public confidence in the monetary system. However, this step requires thorough preparation in terms of technical, logistical, and communications aspects.
The economic objective behind this policy.
Purbaya explains that redenomination aims to simplify economic transactions to be more efficient. In the digital era, cashless payment systems require numbers that are concise and easy to read. Therefore, this policy will help the digital banking system, corporate accounting, as well as the government's fiscal management.
In addition, redenomination is also considered a symbolic move to reaffirm Indonesia's economic stability in the eyes of the world. With simpler numbers, Indonesia can strengthen the image of the rupiah as a stable and modern currency.
Implementation challenges and public perception
Although its benefits are significant, policy Redenomination of the Rupiah Not without challenges. One of the main concerns is the potential for "psychological inflation" in a situation where people feel that prices are rising only because the nominal values appear smaller.
Potential for Psychological Inflation
Psychological inflation can arise when the public misunderstands the concept of redenomination. For example, when the price of goods goes from Rp10,000 to Rp10 after redenomination, some people might consider the price of the goods to have 'gone up' because of the visual comparison of the numbers. Therefore, the government needs to conduct public education on a massive scale.
Bank Indonesia and the Ministry of Finance are expected to play a major role in ensuring that the transition runs smoothly. The experiences of other countries such as Turkey, South Korea, and Russia show that public communication has become a key factor in the success of the redenomination.
Logistics Costs and Technical Adjustments
In addition to the psychological aspects, logistics costs are also a concern. Redenomination will require printing new money, updating the cash register system, accounting software, and ATMs. All of that requires a large budget and interagency coordination.
Purbaya asserts that this policy will not be rushed. The planning and testing phases will be carried out gradually so that the banking sector and the public are ready to face changes.
Preparations for 2027
As the 2027 target approaches, the government and financial authorities are preparing a roadmap for redenomination. This process will involve Bank Indonesia, OJK, and LPS as part of the coordination of the national financial system.
Stages of Redenomination Implementation
The first stage includes public outreach, training for financial institutions, and adjustments to the national payment system. The second stage is a limited trial, for example in government transactions or certain institutions. Only then was the full implementation carried out in the community.
In every stage, the government will assess the economic and psychological impacts to prevent market volatility.
Public Communication and Financial Education
The success of this policy depends heavily on the clarity of public communication. The government is expected to engage the mass media, academics, and the private sector to explain that redenomination does not change the value of money.
According to a number of economists, this policy could also provide momentum to strengthen the public's financial literacy. With a better understanding, society can adapt to an economic system that is increasingly modern and efficient.
Impact on the business and financial world.
For the business world, redenomination will bring challenges as well as opportunities. Entrepreneurs need to update their accounting system, price lists, and business contracts to conform to the new format. However, in the long term, transactions will become more efficient and easier to understand.
Impact on the digital sector and banking
The digital sector, fintech, and banking will be the most positively affected. The electronic payment system will be more streamlined, minimizing input errors, and speeding up transactions. Bank Indonesia will also utilize this momentum to strengthen the national digital financial system that is more inclusive.
Meanwhile, for foreign investors, redenomination demonstrates the government's seriousness in strengthening monetary stability and the rupiah's image in the global market.
Interagency support
Coordination among institutions such as Bank Indonesia, OJK, and LPS is very important to ensure the success of this policy. Each institution will play a role in supervision, education, and technical implementation in the field. The government will also work together with industry players and academics to strengthen public legitimacy.
Plan Redenomination of the Rupiah to become a strategic step in the modernization of the national economy. With a target completion by 2027, the government is committed to implementing this policy in a careful, phased, and transparent manner.
Although there are many challenges, redenomination is expected to strengthen economic efficiency and increase confidence in the rupiah. For society, a correct understanding will be the key to ensuring the transition runs smoothly.
Also read economic news and other monetary policies on the channel. Economy of Insimen to understand the direction of Indonesia's financial reform going forward.
