BI to withdraw vulnerable notes

Rendi A. Witular, The Jakarta Post, Jakarta

In a bid to reduce the rising number of counterfeited banknotes, the central bank is planning to withdraw more notes considered vulnerable to counterfeiting.

Bank Indonesia governor Burhanuddin Abdullah said the banknotes subject to immediate withdrawal were the Rp 50,000 and Rp 10,000 notes. New Rp 100,000 and Rp 20,000 banknotes were released last month.

"The withdrawal is aimed at protecting the banknotes from counterfeiting," said Burhanuddin at a press briefing on Wednesday, after meeting Vice President Jusuf Kalla to report on the central bank's attempts to combat counterfeiting.

Burhanuddin said the new banknotes would have improved protections to prevent them from being easily faked, with one new feature being the so-called "rainbow watermark" lines.

Unlike the old notes, which only have one protection line using one color, the new banknotes will have a number of lines using different colors.

"The protection system applied for our new banknotes will be similar to those applied for the upcoming euro notes," said Burhanuddin.

The government is currently trying hard to combat the number of counterfeit banknotes, on discovering the extent of counterfeiting practices over the past few years.

Data from Bank Indonesia shows that from January to September 2004, BI collected 36,550 fake notes, a 40 percent rise on the same period last year.

Left unchecked, counterfeit banknotes increase the amount money in circulation, adding to inflationary pressure that erodes people's purchasing power.

BI banknote circulation director Lucky Fathul said while the number of counterfeited banknotes in Indonesia was still lower than in most countries worldwide, the central bank will remain vigilant.

According to Lucky, on average there were only seven counterfeited banknotes for every million notes in Indonesia at present. This is lower than the 110 per million in the United States, and 56 per million in Europe.

In order to help reduce counterfeiting, the central bank has appealed to police, prosecutors and judges to impose severe punishments on people involved in the practices, Lucky added.

"At present, counterfeiters have usually been penalized with a lenient two-year prison sentence, while the maximum punishment is 15 years."