1 File Attachment
THE DRAFT CURRENCY LAW
At this time, the legal framework for currency is
scattered among various legal products, i.e. Act No. 23 of
1999 concerning Bank Indonesia as amended by Act No. 3 of
2004 (Articles 2, 19, 20, 21, 22, 23, 65 and 66); the
Criminal Code (Articles 244 to 252); Act No. 6 of 1981
concerning Ratification of the International Convention on
Eradication of Counterfeiting and its Protocols; Act No.
17 of 2003 concerning State Finances (Article 6 paragraph
(2) letter d); and Presidential Instruction No. 1 of 1971
concerning the Anti-Counterfeiting Coordinating Board
(Botasupal).
The lack of integration of these legal provisions,
especially in regard to the provisions on counterfeiting
crimes currently stipulated in the Criminal Code, means
that counterfeiting is categorised as a general felony and
law enforcement has so far failed to provide an adequate
deterrent. Counterfeiting is treated on par with forgery
of ordinary documents, even though counterfeiting of money
is very different from such forgery because of the
extremely serious impact on public confidence in the
rupiah, the direct losses caused to the public and the
damaging impact on the national economic order and
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proliferating money laundering, terrorism and money
politics.
The crime of counterfeiting has also received serious
attention from the Indonesian President. In a speech at
the inauguration of a currency printing facility in
Karawang on 2 February 2005, the President specifically
called on the national police and other law enforcement
authorities to tackle counterfeiting through imposition of
appropriately tough penalties.
Action against counterfeiting is also integral to
Bank Indonesia's goal of maintaining the stability of the
rupiah and Bank Indonesia's powers as monetary and payment
system authority for achieving this goal. The banknotes
and coins issued by Bank Indonesia as legal tender
represent the monetary obligation towards citizens and are
recorded in the balance sheet as liabilities owed by Bank
Indonesia, which exists as a legal entity. The recording
of cash in circulation as Bank Indonesia’s monetary
liability to citizens is the natural consequence of Bank
Indonesia’s position as monetary authority with the
functions of establishing and implementing monetary policy
and regulating and ensuring the smooth operation of the
payment system, as stipulated in the Bank Indonesia Law.
In essence, the sheer importance of control over issuance
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economic activity means that policies for issuance and
circulation of currency are integral to the working
framework for monetary policy and the payment system.
Concerning this, the existence of a Currency Act
bringing together the various existing legal and
regulatory provisions is of great importance, particularly
in support of the goal of Bank Indonesia as set out in the
Bank Indonesia Law, but without diminishing the powers of
relevant agencies/institutions as stipulated in the laws
for their establishment.
In view of the importance of setting out the currency
legal framework in a dedicated law, the material that
should be covered in the Draft Currency Law includes the
following:
1. Definition of currency in physical terms (banknotes and
coins) as in the currency acts of other countries,
such as Singapore, Thailand, Australia and Canada.
2. Obligation to use the rupiah currency as legal tender,
including regulation of quotation prices, prohibition
on rejection of rupiah currency and limited exceptions
to the use of rupiah (restricted to certain places and
for export and import transactions).
3. Distinguishing marks, design and material (including
documentation of key distinguishing marks and
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4. Bank Indonesia’s powers in the issuance, circulation,
revocation, withdrawal from circulation and
destruction of currency.
5. Periodic reporting by Bank Indonesia to the Indonesian
Parliament on circulation of currency, as stipulated
in the Bank Indonesia Law.
6. Obligation for banks to provide exchange of currency as
a service to the public.
7. Bank Indonesia role in conducting research and studies
on counterfeit money and as a centre for
administration of data on counterfeit money.
8. Coordination with relevant institutions/agencies in
eradication of counterfeit money.
9. Criminal penalties (principles for criminal prosecution
should be different from the Criminal Code,
particularly for prescribing of minimum and maximum
penalties and cumulative fines, and the stipulation of
