BI to issue new bank notes in anticipation of Y2K

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)