The Sanering Myth and the Urgency of National Economic Modernization

NoLimit Indonesia – Discourse on simplifying the value of the Rupiah currency, or what is known as Redenominationoften raises concerns in society. This is generally caused by a confusion of understanding which equates redenomination with Decontamination (cutting the value of money) that has occurred in the past.

Redenomination is a monetary policy for simplify nominal currency (for example, removing three zeros) without changing exchange rates or purchasing power actually. On the other hand, sanering is an emergency policy for undercut real value money drastically, so directly reduce purchasing power public.

Difference Between Redenomination and Sanering

The most basic difference between these two policies lies in impact on people’s purchasing power And underlying economic conditions its implementation.

Aspect	Redenomination	Sanering (Cutting the Value of Money)
Simple Definition	Nominal simplification (removing zeros).	Cutting the value of money and purchasing power.
Impact on Purchasing Power	REMAINS THE SAME (Prices of goods are also simplified).	DRATICALLY REDUCED (Prices of goods do not fall or even remain high).
Economic Conditions	Stable, low and controlled inflation.	Emergency, economic crisis, or hyperinflation.
The main purpose	Efficiency, modernization and improving the image of the currency.	Attracting money circulation and suppressing hyperinflation.
Example (If 1,000 becomes 1)	IDR 1,000 buys 2 pieces of candy $\rightarrow$ New Money IDR 1 buys 2 pieces of candy.	IDR 1,000 buys 2 pieces of candy $\rightarrow$ New Money IDR 1 buys 0.002 pieces of candy.

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Historical Data on Sanering Cases in Indonesia

Indonesia once implemented a sanering policy, which at that time was called “money recovery”as an emergency measure hyperinflation and severe economic turmoil.

• First Sanering (25 August 1959): The government cuts the value of denomination notes IDR 500 and IDR 1,000 become IDR 50 and IDR 100which means there is a cut in value up to 90% (10:1). This policy also blocks current and deposit deposits at banks.
• Second Baby (M Decete 13 December 1965): In a situation where inflation is reaching 650% per year, value for money IDR 1,000 (old money) reduced to Rp. 1 (new money) (1,000:1). This policy failed to reduce inflation and actually triggered further economic chaos.

These two events are the reasons why the public tends to be worried, but it is important to emphasize that Modern redenomination does not have the same impact as sanering of that era.

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Why is Rupiah Redenomination Important?

Redenomination is a step monetary modernization which aims to create a more efficient payment system and strengthen the credibility of the Rupiah on the global stage. Bank Indonesia (BI) and the Government emphasize that this policy will only be implemented when economic conditions arise stable and ready.

1. Transaction and Payment System Efficiency

With fewer digits (for example, IDR 100,000 to IDR 100), cash and non-cash transactions become more practical And fast. Subtraction of these zeros too Minimizes the risk of input errors in manual transactions and digital systems.

2. Simplification of Accounting and Bookkeeping

The large number of digits in the Rupiah currently makes accounting and financial reporting systems difficult, especially those involving trillions. Redenomination will make bookkeeping systems, tax reporting and financial software (such as cash registers/POS) more efficient. simple And easy to manageboth for large companies and MSMEs.

3. Improved Currency Image and Credibility (Psychological Aspect)

Among the main currencies in Southeast Asia, the Rupiah is the one with the largest denomination (largest denomination IDR 100,000). Very large nominal amounts often make an impression psychologically weak currency value in international eyes. Redenomination will make the Rupiah look better rational And easy to compare with foreign currency, which can eventually increase trust against the national currency and attract investment.

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Timeline of Rupiah Redenomination Discourse

The redenomination discourse is nothing new. This has been going on for a long time, being part of Bank Indonesia’s monetary modernization agenda:

• 2010–2014: The redenomination discourse began to strengthen during the administration of President Susilo Bambang Yudhoyono. Bank Indonesia even had time to prepare a draft Rupiah Redenomination Draft Law (RUU)..
• 2013: The Redenomination Bill was proposed to be included in the priority National Legislation Program (Prolegnas), but was then postponed due to considerations of macroeconomic conditions which were not yet completely stable and the psychological risks to society.
• 2020: The government (Ministry of Finance) has again included the Redenomination Bill in the 2020–2024 Strategic Plan.
• At the moment: Bank Indonesia and the Government are gradually continuing to push forward preparations for redenomination, with a target for completion of the bill and potential implementation planned in the medium term (some sources say the target is up to 2027).

This policy requires long transition period (estimated 5–7 years) with the application of two price tags (old price and new price) to ensure the public is fully educated and psychological risks are minimized.

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Monetary Modernization Steps

Rupiah redenomination is a strategic step towards economic efficiency and improving the currency’s image. It’s fundamental different with sanering, which is a deduction of value. With Indonesia’s currently relatively stable macroeconomic conditions, redenomination is seen as a viable policy safe And urge to support digital transformation and simplify the national financial system.