BI to issue new bank notes in anticipation of Y2K

JAKARTA (JP): Bank Indonesia will issue Rp 100,000 bank notes beginning on Monday to anticipate an increased demand for cash as a result of worries about the Year 2000 computer bug.

"This is to anticipate soaring public demand for cash ahead of the Millennium Bug or Y2K," Bank Indonesia deputy governor Aulia Pohan said on Wednesday.

Pohan said the Y2K World Committee required all central banks to increase their cash supplies by five times the normal level as part of the contingency plan to deal with Y2K problems.

The Y2K bug stems from computer programs which use only two digits to denote the year. Older computers could mistake 2000 for 1900 and crash at the beginning of the new year.

Non-Y2K-compliant computers could fail and disrupt the banking system.

Pohan also said the issuance of the new Rp 100,000 notes was aimed at facilitating cash transaction.

The hyperinflation which hit the country last year caused the Rp 50,000 note, currently the largest denomination in circulation, to become less valuable.

Pohan said the central bank would print up to Rp 50 trillion of the new Rp 100,000 notes before the new year.

Pohan, however, dismissed concerns printing the new notes would spark inflation.

He said the central bank would control the money supply and issue the new notes gradually, according to demand.

Pohan said that judging by the currency's stability from January to August, the currency now in circulation would likely remain stable.

He said the amount of currency in circulation in January was Rp 102 trillion, in May Rp 103 trillion and in August Rp 105 trillion.

"We'll make sure that we avoid inflationary pressure from the currency (supply) side," Pohan said.

Inflation has plagued Indonesia since the economy suffered hyperinflation of more than 77 percent last year. However, inflation seems to have been controlled, with inflation for 1999 predicted to come in at about 2 percent.

Pohan also urged the public not to panic as 2000 approaches.

He said the country's 20 largest banks, which handle 80 percent of banking transactions, were 100 percent Y2K compliant.

He added that smaller banks which were not fully Y2K compliant had prepared contingency plans, including preparing for manual operation.

"We'll check these contingency plans at the end of October," he said.

Pohan said the new rupiah bank notes would be made of polymer substrate plastic, adding the material would last for about six years and help prevent counterfeiting.

The size of the new notes will be 151 millimeters by 65 millimeters. The front of the notes will sport the likenesses of the country's first president and vice president, Sukarno and Mohammad Hatta, respectively.

The back of the notes will depict the People's Consultative Assembly/House of Representatives building.(rei)