Perdana Wahyu Santosa Professor of Economics, Dean of FEB Universitas YARSI, and Director of Research at GREAT Institute
The discourse on rupiah redenomination—simplifying digits in currency denominations without changing purchasing power—has resurfaced. This time, it was raised by Finance Minister Purbaya Yudhi Sadewa. The government stated that it is preparing a Draft Law on Redenomination/Change of Rupiah Prices as part of a medium-term monetary-fiscal reform agenda; the target is projected to be completed in 2026–2027.
This policy plan is not a new idea: Bank Indonesia (BI) has promoted it since 2010, the House of Representatives (DPR) studied it in 2012, and public discourse heated up again after it was included in the Ministry of Finance Strategic Plan 2025–2029 (PMK 70/2025). Amid the change of Finance Minister from Sri Mulyani to Purbaya (8 September 2025), the issue appears to have regained strong political momentum—however, momentum is not a substitute for technical prerequisites. Redenomination succeeds if the economy is stable, inflation is low and manageable, the payment system is ready, and public communication is precise so it is not misinterpreted as “sanering.”
Is the Urgency High?
There are at least three commonly cited pro-urgency arguments. First, accounting and payment system efficiency: reducing digits simplifies pricing, budgeting, and POS/ATM interfaces, while also reducing reading errors. Second, improved credibility and prestige of the rupiah: simpler nominal values are considered to facilitate international comparison and perceptions of stability, as long as purchasing power does not change. Third, the momentum of transformation in payment infrastructure (QRIS, real-time payments) which makes simultaneous system upgrades easier.
However, high urgency is not automatic. Redenomination is not an inflation or exchange rate cure; it is cosmetic and useful only if macroeconomic fundamentals are solid. If inflation is rising or public expectations are unstable, the risk of miscommunication increases. Several economists warn of potential negative effects if implemented hastily—from price confusion, MSME transition costs, to rounding-up effects that may trigger micro-inflation. In other words: urgency is conditional with requirements—urgency is considered high only if prerequisites are met and the roadmap is credible; otherwise, it is safer to postpone.
Core Benefits: Transaction and Reporting Efficiency
Typing, recording, and price display become simpler; accounting standards, cashier systems, and ERP systems are streamlined. Price uniformity and financial education improve. Dual labeling (old–new) during the transition teaches discipline in rounding and transparency.
It also signals credibility. Countries that successfully implement redenomination generally prepare strong and consistent public communication: “this is not a value cut, only a unit adjustment.”
Main Risks
Rounding inflation. Traders tend to round prices upward, especially for psychologically priced goods (snacks, parking tickets).
Small denomination policy (coins/e-money) is needed to make rounding-down feasible. Next, MSME burden. Replacing cash registers, labels, and promotional materials is not a small cost. Tax incentives or digital transition vouchers are important.
Then payment system complexity. ATMs, core banking systems, switching systems, e-wallets, QRIS, and derivative contracts require a synchronized migration calendar—and large-scale testing.
- High public misunderstanding risk. Without massive and systematic campaigns, redenomination can easily be mistaken for sanering (purchasing power cuts). The 1965 experience—which was indeed sanering—remains in collective memory; here lies the test of government communication strategy.
Recommendations
Set explicit macro prerequisites. It is advisable to establish measurable macro “triggers” before go-live: core inflation consistently within BI’s target range, stable exchange rate volatility, credible fiscal deficit trajectory, and government account balances within a safe range to absorb cash payment shocks. Publish these indicators quarterly as a readiness dashboard. (The 2010 BI–Ministry of Finance fiscal-monetary policy framework can be used as a methodological reference.)
Redenomination Bill with sunset & switch-over design. It should include: (a) dual price display period (e.g. 12–24 months), (b) overlapping period of old and new currency at a fixed 1:1,000 rate (if 3 zeros are removed) until the end date, (c) tick-size rules and smallest denomination to minimize rounding inflation, (d) sunset clause—a firm deadline for withdrawal of old currency with flexible exchange at BI.
Target legislation for 2026–2027 is realistic; set public milestones for accountability.
“No-surprises” communication—4 pillars campaign. Pillar (i) Definition: emphasize “not sanering, real value unchanged.” (ii) Concrete examples: official converter (Rp1,000 old = Rp1 new) in government/BI apps, at cashiers, and on price tags. (iii) Consumer protection: ban unilateral markups during relabeling; complaint channels. (iv) MSME education: labeling toolkits, receipt templates, and offline-online training. Ensure consistent narratives across all channels, including official social media of the Finance Ministry/BI.
Phased technical migration with pilot. Start with sandbox testing in several cities and transaction categories (public transport, modern retail, government payments) for 3–6 months.
Use A/B testing of psychological pricing (e.g. Rp9,900 becomes Rp9.90 new) to map rounding behavior. Prepare an incident playbook for ATM errors, failed debits, or double billing. Move to nationwide switch only after pilot KPIs are achieved.
MSME transition cost incentives. Provide (i) tax credits for POS/cash register upgrades, (ii) digital vouchers for label replacement, (iii) free technical assistance through cooperatives agencies and state-owned banks.
Accounting–taxation–contract harmonization. Issue accounting and tax guidelines mapping old–new rupiah: rounding, materiality, revaluation, tariffs, fees, reporting thresholds (PTKP, VAT, final MSME income tax). For long-term contracts (leases, mortgages, derivatives), prepare redenomination-safe clauses to avoid nominal disputes.
