Bank Indonesia is mandated with regulating and maintaining an uninterrupted payment system. The Currency Act (No. 7 of 2011) defines the rupiah as the basic monetary unit and legal tender issued by the Republic of Indonesia. Rupiah currency management involves six stages, namely planning, printing, issuing, circulation, withdrawal and destruction. The planning, printing and destruction phases are implemented by Bank Indonesia in conjunction with the Government. Meanwhile, Bank Indonesia is the sole authority responsible for issuing, circulating and withdrawing the rupiah. The six stages of rupiah currency management are described in more detail as follows.
Planning is the first stage of rupiah currency management. Planning functions to estimate and determine currency demand, the totals and denominations to be printed as well as new series and editions. Planning is conducted by Bank Indonesia in coordination with the Government by submitting the estimated level of demand for currency in the upcoming period based on several macroeconomic assumptions, including economic growth, inflation, exchange rate and interest rate. During the planning stage, the design of the notes is finalised, including the colour, security elements in line with technological development, the materials, dimensions and designs featured on the obverse and reverse of the notes. Who is featured on the notes is decided in conjunction with the Ministry of Social Affairs of the Republic of Indonesia as well as the progeny of national heroes, which is then explicitly stipulated in a Presidential Decree of the Republic of Indonesia.
After the planning has been finalised, the printing process can begin. Pursuant to the mandate stated in the Currency Act (No. 7 of 2011), rupiah printing is the responsibility of Bank Indonesia and is performed domestically by an approved state-owned enterprise. The printing process is conducted by competent professionals using state-of-the-art equipment, thus guaranteeing high levels of accuracy and security. Furthermore, Bank Indonesia oversees the entire printing process. To maintain banknote quality, the materials received from suppliers are subject to stringent laboratory testing, thus ensuring the materials meet the highest specifications as determined by Bank Indonesia. At the end of the printing process, the currency is transferred to the treasury at Bank Indonesia.
Rupiah currency is issued in the form of new editions, new designs as well as commemorative and uncut notes (URK) to mark significant national or international events. Rupiah currency is issued based on extensive and comprehensive planning to ensure the best quality and maintain public confidence and trust.
Circulation involves a series of rupiah currency distribution activities throughout the territory of the Republic of Indonesia through a network of Bank Indonesia representative and branch offices located in each province. The currency is distributed using various land, sea and air transportation modes. Bank Indonesia also provides internal and external cash services to ensure the currency reaches the hands of the public. Internal cash services focus on bank deposit and withdrawal services as well as exchanging damaged, worn and withdrawn notes and coins. Meanwhile, external cash services are provided at bustling public places, including markets, exhibitions, campuses and government office complexes, as well as in remote, frontier and outermost regions in conjunction with the Government and Indonesian Navy. External cash services function to exchange currency that is unfit for circulation (worn, defaced or damaged) with currency fit for circulation of the same or different denominations as well as to exchange currency that has been withdrawn from circulation.
Rupiah banknotes are withdrawn from circulation through a series of activities to determine whether the currency is still fit for circulation as legal tender in the territory of the Republic of Indonesia. Withdrawal from circulation is based on a Bank Indonesia Regulation that can be accessed on the official Bank Indonesia website and other information media, including televisions, newspapers, social media and radio. The public can exchange withdrawn rupiah notes and coins for up to 10 years. During the first five years, the withdrawn currency can be exchanged at any commercial bank or Bank Indonesia branch office within the territory of the Republic of Indonesia. In the subsequent five years, the withdrawn currency can only be exchanged at a Bank Indonesia branch office. Thereafter, the withdrawn currency can no longer be exchanged.
The destruction of notes and coins represents Bank Indonesia’s commitment to consistently meet public demand for currency fit for circulation. Banknotes and coins are destroyed when they no longer meet the high quality standards set by Bank Indonesia. Such banknotes and coins are difficult to authenticate, thus increasing the risk of counterfeit notes appearing in daily transactions. The destruction process involves a high level of accountability and strict supervision. The total amount of currency destroyed by Bank Indonesia within a specific period is submitted to the Government and contained in a State Gazette of the Republic of Indonesia.
