T

he finance minister will become the co-signatory of new rupiah banknotes issued by Bank Indonesia (BI) following an agreement signed by the fiscal and monetary authority in Jakarta recently, a statement reveals.

A joint statement issued by the ministry and the central bank on Tuesday says a memorandum of understanding (MoU) was signed on June 27 on the coordination of banknote issuance and destruction in a bid to improve transparency and accountability as demanded by the 2011 Currency Law.

Article 47 of the law stipulates that a regulation on currency management must be issued within one year of the law being endorsed. The deadline fell on June 28.

Under the MoU, in future the central bank must consult with the Finance Ministry on the amount and denomination of banknotes to be printed.

“During the planning process, Bank Indonesia will invite the Finance Ministry to formulate the amount of rupiah to be printed based on numerous economic assumptions.

The ministry will then provide input on the amount of rupiah that needs to be printed,” the statement says.

Due to this agreement, new rupiah banknotes will bear the signatures of the BI governor and the finance minister. Currently, rupiah banknotes contain the signatures of two BI representatives — the governor and the deputy governor.

New banknotes will also contain the phrase “Unitary State of the Republic of Indonesia” instead of “Bank Indonesia”.

Under the MoU, BI will also inform the Finance Ministry of the amount and denomination of rupiah to be destroyed once every three months.

Other than informing the Finance Ministry, BI will also inform the Law and Human Rights Ministry so that it can publicly announce the data of the destroyed banknotes once a year.

Heavily damaged banknotes, expired banknotes and those still circulating but having lost their economic value will be destroyed. Rupiah issuance, distribution and destruction are not stipulated in the agreement, as all of the issues fall under the full authority of BI.

— JP/Hans David Tampubolon