How to Regulate the Currency

by 8 Degrees of Latitude

Super Idea
Proposals for a redenomination of the rupiah which have resurfaced from Bank Indonesia are essentially sensible and should be welcomed. There is however one difficulty with the proposal – insofar as the details are known – to knock three zeroes off the currency under which Rp1000, Rp2000, Rp5000, Rp10,000, Rp20,000, Rp50,000 and Rp100,000 would become Rp1, Rp2, Rp5, Rp10, Rp20, Rp50 and Rp100.
This is because by reducing Rp1000 to Rp1 you lose the capacity to divide below the primary number. Rp1 would therefore become the minimum available currency value. It would mean no one could mark up prices by Rp500, for example. Or reduce a price by the same sub-unit amount (assuming there was ever a blue moon).
The central bank could reintroduce the sen (cent) of course. But we have heard of no plans to do so. And in any case, it would then be better to strike four zeroes off the face value – converting the current Rp10,000 into the new Rp1, divisible into 100 sen.
That’s complicated. There is another way to simplify things and reduce the confusion wrought by zero-overload. That is to superscript the zeroes on banknotes and the Rp1000 coin. Like this: Rp1000; Rp2000 ;Rp5000; Rp10000; Rp20000 ; Rp50000; Rp100000. Leading retailers already do this in stock display signage. It would also need only a minor redesign of banknotes and existing lower denomination coins could remain in use.
– from Hector’s Diary in the Bali Advertiser, Jan. 25, 2012