“Regarding redenomination, we have been ready for a while,” BI Governor Perry Warjiyo affirmed at a press conference on Thursday, noting that this readiness included the design and introductory strategy for the new currency.

The smallest rupiah banknote currently in circulation is Rp 1,000, while the largest is Rp 100,000.

Perry added that the right time for redenomination must meet the three key preconditions of strong macroeconomic environment, monetary and financial system stability and conducive political climate.

While he acknowledged the national economy’s positive performance, he emphasized that "it’s good, of course, to ascertain the right moment [...], because the ramifications from global [developments]” still hold sway.

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The discussion on rupiah redenomination has been going on for decades. The Finance Ministry provided the strongest indication yet that three zeros might be removed from the national currency when it submitted the currency redenomination bill in 2017.

The redenomination plan was supposed to materialize in 2020 but that never happened, because the bill was not included in the National Legislation Program in 2018, 2019 or 2020. Cabinet and BI leadership reshuffles, as well as other matters deemed more urgent, also left the redenomination plan on the back burner.

However, the plan was dusted off in a 2020 ministerial regulation on the Finance Ministry's 2020-2024 strategy.

Economy and banking analyst Doddy Ariefianto from Binus University believes that now is “the right moment” to realize the plan, particularly since inflation had long been in single digits.

“The right policy is a policy that is anticipatory […]. Redenomination would raise the prestige of the rupiah in the eyes of the world,” he told The Jakarta Post on Friday, and that this would be in line with the government’s vision to become a developed country by 2045.

“There are not many zeros in the currencies of developed countries. Fewer zeros mean efficient business,” Doddy added.

Abdul Manap, a researcher at the Institute for Development of Economics and Finance (INDEF), concurred that redenomination would be “worth it”, as it could benefit businesses and instill the public with a sense of patriotism and pride in the national currency.

“Psychologically, the public and economic actors become more confident when holding [redenominated] money, even though the value is the same,” Abdul told the Post on Friday, and that as such, no major issues stood in the way of the rupiah’s redenomination.

But he noted the absence of any “specific target” in the government’s plan, even as BI worked on a central bank digital currency (CBDC).

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Redenomination would also simplify long financial statements and other records.

Senior faculty member Amin Nurdin from the Indonesian Banking Development Institute (LPPI) said this would benefit financial institutions in terms of their business processes, reporting and financial calculations.

“Several large banks have made general preparations in case the government executes the plan” and were as ready as BI was, Amin told the Post.

Is the public ready?

Abdul meanwhile emphasized the need to familiarize and educate the public on the redenomination plan.

This was particularly important “for the generation that experienced having to cut their banknotes in half", he said, referring to when people were told to physically cut rupiah banknotes down the middle during the currency shortage in 1950.

Later that year, old rupiah banknotes were exchanged for new ones at a ratio of 1,000 to one.

Abdul expressed his confidence that people today were sufficiently financially literate to understand redenomination, and the plan could be explained either in person or on television and social media.

But Doddy opined that financial literacy was not relevant, because “redenomination is not complex to begin with”.

Furthermore, the public’s readiness for lopping off “000” was reflected in the informal redenomination of the rupiah over the years. Many restaurants and retailers used the letter “K” to denote “thousand”, effectively creating the semblance of a revamped currency.

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In spoken Indonesian, the word “rupiah” is often omitted when the context makes its use unnecessary, which creates the impression that the word for thousand, “ribu”, is used as a monetary unit. Should the rupiah redenomination come to pass, people would simply need to readjust by remembering to drop "ribu" and tack on “rupiah” instead.

Doddy also pointed out the potential changes for rupiah coins, which currently range from Rp 100 to Rp 1,000. These could be phased out altogether, he said, or BI could introduce a smaller monetary unit, like the cent for one-hundredth of a dollar or the euro.