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STRATEGY FOR CASH CENTRES IN INDONESIA
Indonesia’s ever rising volume of currency in
circulation over the years has led to need for enhancements
in cash management functions involving technology-based
improvements in efficiency and security and increased
operational effectiveness in cash management consistent with
the best practices of central banks around the world.
To strengthen operational effectiveness in cash
management, Bank Indonesia will shift to the wholesale
supply of cash to banks and encourage banks to implement
more efficient and effective cash management, including a
more active role for banks in management of currency fit for
circulation. Nevertheless, currency unfit for circulation
will still be managed by BI. Thus eventually, BI expects to
be involved only in the issuance of new currency and
destruction of currency unfit for circulation, while other
activities will be handled by other parties. The other
parties handling these activities may be banks or non-bank
entities, i.e. cash centres or banks operating as cash
centres.
The introduction of cash centres to the currency
circulation system depends on support from various
stakeholders in the provision of fully adequate
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framework specifying the powers and functions of cash
centres in their interaction with BI and the banking system,
the facilities to be used by the cash centres and the
readiness of banks for transfer of cash management
functions.
Precursors to Cash Centres in Indonesia
1.Existing entities with potential to operate as cash
centres in Indonesia include cash in transit companies,
small denomination exchange companies, banks and the post
office.
2.From the policy angle, the current preconditions for
establishment of cash centres are:
• Stage I implementation consisting of trial
implementation of the regulation governing incoming
and outgoing cash at banks, in which banks are
required to accept cash in denominations of Rp 10,000
or less only if the currency is not fit for
circulation.
• The bank obligation to submit reports of its projected
cash collection and deposit at BI as one step towards
effective and efficient cash management.
• Drafting of Bylaws on cash deposits and payouts as
supplementary rules to the guidelines for testing of
cash deposits and payouts, to be drafted and approved
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cash deposits and payouts. These Bylaws will be
binding on all member banks of a service office.
• Set up of a mailing list for exchange of information
among banks concerning short or long cash positions.
• Establishment of 12 bank focus groups, each under a
bank acting as coordinator, to provide facilitation
for problems faced by individual banks.
Launching of Cash Centres
The cash centre strategy and policy for Indonesia will be
implemented in 3 (three) stages as follows:
• Short-term: Improvements to cash handling activities
as a forerunner for operation of cash centres through
the implementation of trial cash deposit and payouts
at banks. At this stage, Bank Indonesia will also be
requiring banks to handle deposits of cash unfit for
circulation.
• Medium-term: Perform the landscaping of banks and
non-bank entities that can serve as precursors to cash
centres and provide efficient, effective service to
banks. This will take place within a specified region
with the introduction of formal legal provisions on
cash deposits and payouts, development of information
systems, mapping of local needs including the need for
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qualifications for supervision of cash centre
entities.
• Long-term: Prepare for launching of cash centres,
among others supported by: rules on operational
mechanisms, such as the settlement system, supervision
and examination system, cash processing system and
remittances system to ensure that cash centres comply
