Joint Press Release
No. 14/ 22 /PSHM/Humas
As is widely known, based on Act No. 7, 2011 (The Currency Act), the Rupiah is a symbol of state sovereignty that must be respected by all citizens of Indonesia. The Currency Act also stipulates that the Rupiah is legal tender in the Republic of Indonesia, which must be used in all cash transactions throughout the Indonesian archipelago.
Article 47 of the Currency Act specifies that its implementation must take no more than one year from the date the Currency Act was promulgated, a period that ends on 28th June 2012. In its implementation, the Government of Indonesia and Bank Indonesia prepared a memorandum of understanding concerning a Coordination Mechanism for Rupiah Planning, Printing and Destruction.
On Wednesday, 27th June 2012, in Jakarta, Agus Martowardojo, the Minister of Finance, representing the Government of Indonesia and Darmin Nasution, the Governor of Bank Indonesia signed the memorandum of understanding regarding a Coordination Mechanism for Rupiah Planning, Printing and Destruction.
The memorandum of understanding represents a set of guidelines for coordination between the Government and Bank Indonesia in the form of communication and information exchange as well as checks and balances that raise the accountability and transparency of rupiah management in the planning, printing and destruction of the Rupiah. Other elements of Rupiah management, including the expenses incurred, the actual circulation of the money as well as withdrawing old bills from circulation, remain under the auspices of Bank Indonesia and are thereby not mentioned in the newly signed memorandum of understanding.
The memorandum of understanding agrees a coordination mechanism for Rupiah planning and printing as follows:
- Planning for Rupiah to be printed involves determining how much currency to print and in which denominations. The amount of Rupiah to be printed is determined by a number of considerations including the assumed level of inflation, assumed economic growth, the planned types and price of the Rupiah, as well as the amount to be destroyed. The favoured denominations are decided upon by considering monetary conditions, practicality as a payment instrument, and/or the public requirement.
- When planning how much Rupiah to print in a specified period, Bank Indonesia will invite the Ministry of Finance (Kemenkeu) to help formulate the plan and assert their assumptions. Subsequently, the Ministry of Finance will provide input on the planned printing run.
- Similarly, prior to Bank Indonesia issuing new rupiah denominations, Bank Indonesia will submit the information to the Ministry of Finance. New banknotes will contain the signature of the Government represented by the Minister of Finance and Governor of Bank Indonesia, and will accommodate a change in the phrase from ‘Bank Indonesia’ to ‘Negara Kesatuan Republik Indonesia’ (Republic of Indonesia).
The agreement on coordinated rupiah management also extends to the destruction of rupiah unfit for circulation, rupiah fit for circulation but no longer economically viable according to predetermined considerations and/or rupiah that falls out of demand from the general public as well as old rupiah banknotes. The actual destruction of rupiah banknotes is conducted according to internal Bank Indonesia regulations. Every three months, BI submits information concerning the rupiah to be destroyed to the Ministry of Finance, containing the denominations to be destroyed, their value and the total number of banknotes. In addition, Bank Indonesia also submits this information to the Ministry of Justice and Human Rights to release to the general public through a State Gazette once annually for the period from 1st January to 31st December.
Jakarta, 3rd July 2012