Central Bank Issues Regulation on Rupiah Use in International Events
The central bank Bank Indonesia (BI) has issued Regulation Number 24/6/PBI/2022 on the Use of Rupiah in International events.
The Regulation applies since April 27, 2022.
The Regulation aims to provide a comprehensive Regulation covering all aspects of the use of rupiah in international events and support economic development.
“The impact of the Regulation on the use of rupiah is expected to support stability of rupiah exchange rate, encourage financial market deepening, and encourage improvements in the structure of the domestic economy,” the Regulation states.
The Regulation stipulates that the main principle of using rupiah in international events is that the use of rupiah can only be carried out within the territory of the Unitary State of the Republic of Indonesia (NKRI) and if it is used outside the territory of the Republic of Indonesia, its use can be limited as long as it has positive impacts and benefits for the economy of Indonesia.
The scope of the use of rupiah in international events includes the use of rupiah outside the territory of the Republic of Indonesia and the use of rupiah by non-residents within the territory of the Republic of Indonesia.
“The use of rupiah outside the territory of the Republic of Indonesia includes its use in physical form, accounts (account based), and digital financial instruments (digital based). The use of rupiah outside the territory of the Republic of Indonesia includes its use in quotations, financial transactions, and financial transaction settlements,” the Regulation states.
The Regulation also states that the use of rupiah by non-residents within the territory of the Republic of Indonesia must be supported by underlying economic activities.
“Bank Indonesia may impose administrative sanctions for any violation of the policy on the use of rupiah in international events,” the Regulation reads.
The policy is the basis for several monetary provisions related to the use of rupiah outside the territory of the Republic of Indonesia and/or within the territory of the Republic of Indonesia issued by Bank Indonesia since 2001, namely:
- Regulation of Bank Indonesia Number 3/3/PBI/2001 on Restrictions on Rupiah Transactions and Provision of Foreign Currency Loan by Banks which has been amended several times, most recently by Regulation of Bank Indonesia Number 18/19/PBI/2016 on Foreign Exchange Transactions for Rupiah between Banks and Foreign Entities;
- Regulation of Bank Indonesia Number 4/8/PBI/2002 on Requirements and Procedures for Carrying Rupiah Out or Into the Customs Territory of the Republic of Indonesia;
- Regulation of Bank Indonesia Number 19/11/PBI/2017 on Settlement of Bilateral Transactions Using Local Currencies through Banks which has been amended several times, most recently by Regulation of Bank Indonesia Number 23/9/PBI/2021 on Amendment to Regulation of Bank Indonesia Number 22/12/PBI/2020 on Settlement of Bilateral Transactions Using Local Currencies through Banks; and
- Regulation of Bank Indonesia Number 20/10/PBI/2018 on Domestic Non-Deliverable Forward Transactions.
The official website of Bank Indonesia can be accessed here. (RI/MMB)
