Cash Centre Strategy in Indonesia
File as at t achm ent :
STRATEGY FOR CASH CEN TRES I N I N D ON ESI A
I ndonesia’s ever rising volum e of currency in circulat ion over t he years has led
t o need for enhancem ent s in cash m anagem ent funct ions involving t echnology- based
im provem ent s in efficiency and securit y and increased operat ional effect iveness in
cash m anagem ent consist ent wit h t he best pract ices of cent ral banks around t he
world.
To st rengt hen operat ional effect iveness in cash m anagem ent , Bank I ndonesia
w ill shift t o t he w holesale supply of cash t o banks and encourage banks t o im plem ent
m ore efficient and effect ive cash m anagem ent , including a m ore act ive role for banks
in m anagem ent of currency fit for circulat ion. Nevert heless, currency unfit for
circulat ion w ill st ill be m anaged by BI . Thus event ually, BI expect s t o be involved only
in t he issuance of new currency and dest ruct ion of currency unfit for circulat ion, while
ot her act ivit ies will be handled by ot her part ies. The ot her part ies handling t hese
act ivit ies m ay be banks or non- bank ent it ies, i.e. cash cent r es or banks oper at ing as
cash cent res.
The int roduct ion of cash cent res t o t he currency circulat ion syst em depends on
support from various st akeholders in t he provision of fully adequat e infrast ruct ure.
Preparat ions include t he regulat ory fram ework specifying t he powers and funct ions of
cash cent res in t heir int eract ion w it h BI and t he banking syst em , t he facilit ies t o be
used by t he cash cent res and t he readiness of banks for t ransfer of cash m anagem ent
funct ions.
Pr e cu r sor s t o Ca sh Ce n t r e s in I n don e sia
1. Exist ing ent it ies wit h pot ent ial t o operat e as cash cent res in I ndonesia include
cash in t ransit com panies, sm all denom inat ion exchange com panies, banks and
t he post office.
2. From t he policy angle, t he current precondit ions for est ablishm ent of cash cent res
ar e:
?
St age I im plem ent at ion consist ing of t rial im plem ent at ion of t he regulat ion
governing incom ing and out going cash at banks, in which banks are required
t o accept cash in denom inat ions of Rp 10,000 or less only if t he currency is
not fit for circulat ion.
?
The bank obligat ion t o subm it report s of it s proj ect ed cash collect ion and
deposit at BI as one st ep t ow ards effect ive and efficient cash m anagem ent .
1
?
Draft ing of Bylaws on cash deposit s and payout s as supplem ent ary rules t o
t he guidelines for t est ing of cash deposit s and payout s, t o be draft ed and
approved by banks t o st r eam line t he t r ial oper at ion of bank cash deposit s
and payout s. These Bylaws will be binding on all m em ber banks of a service
office.
?
Set up of a m ailing list for exchange of inform at ion am ong banks concerning
short or long cash posit ions.
?
Est ablishm ent of 12 bank focus groups, each under a bank act ing as
coordinat or, t o provide facilit at ion for problem s faced by individual banks.
La u n ch in g of Ca sh Ce n t r e s
The cash cent re st rat egy and policy for I ndonesia will be im plem ent ed in 3 ( t hree)
st ages as follow s:
?
Short - t er m : I m provem ent s t o cash handling act ivit ies as a forerunner for
operat ion of cash cent res t hrough t he im plem ent at ion of t rial cash deposit
and payout s at banks. At t his st age, Bank I ndonesia w ill also be requiring
banks t o handle deposit s of cash unfit for circulat ion.
?
Medium - t er m : Perform t he landscaping of banks and non- bank ent it ies t hat
can serve as precursors t o cash cent res and provide efficient , effect ive
service t o banks. This w ill t ake place w it hin a specified region w it h t he
int roduct ion of form al legal provisions on cash deposit s and payout s,
developm ent of inform at ion syst em s, m apping of local needs including t he
need
for
cash
cent res
and
t he
m echanism s
and
hum an
resources
qualificat ions for supervision of cash cent re ent it ies.
?
Long- t erm : Prepare for launching of cash cent res, am ong ot hers support ed
by: rules on operat ional m echanism s, such as t he set t lem ent syst em ,
supervision
and
exam inat ion
syst em ,
cash
processing
syst em
and
rem it t ances syst em t o ensure t hat cash cent res com ply wit h regulat ions and
t o im prove supervision.
2
STRATEGY FOR CASH CEN TRES I N I N D ON ESI A
I ndonesia’s ever rising volum e of currency in circulat ion over t he years has led
t o need for enhancem ent s in cash m anagem ent funct ions involving t echnology- based
im provem ent s in efficiency and securit y and increased operat ional effect iveness in
cash m anagem ent consist ent wit h t he best pract ices of cent ral banks around t he
world.
To st rengt hen operat ional effect iveness in cash m anagem ent , Bank I ndonesia
w ill shift t o t he w holesale supply of cash t o banks and encourage banks t o im plem ent
m ore efficient and effect ive cash m anagem ent , including a m ore act ive role for banks
in m anagem ent of currency fit for circulat ion. Nevert heless, currency unfit for
circulat ion w ill st ill be m anaged by BI . Thus event ually, BI expect s t o be involved only
in t he issuance of new currency and dest ruct ion of currency unfit for circulat ion, while
ot her act ivit ies will be handled by ot her part ies. The ot her part ies handling t hese
act ivit ies m ay be banks or non- bank ent it ies, i.e. cash cent r es or banks oper at ing as
cash cent res.
The int roduct ion of cash cent res t o t he currency circulat ion syst em depends on
support from various st akeholders in t he provision of fully adequat e infrast ruct ure.
Preparat ions include t he regulat ory fram ework specifying t he powers and funct ions of
cash cent res in t heir int eract ion w it h BI and t he banking syst em , t he facilit ies t o be
used by t he cash cent res and t he readiness of banks for t ransfer of cash m anagem ent
funct ions.
Pr e cu r sor s t o Ca sh Ce n t r e s in I n don e sia
1. Exist ing ent it ies wit h pot ent ial t o operat e as cash cent res in I ndonesia include
cash in t ransit com panies, sm all denom inat ion exchange com panies, banks and
t he post office.
2. From t he policy angle, t he current precondit ions for est ablishm ent of cash cent res
ar e:
?
St age I im plem ent at ion consist ing of t rial im plem ent at ion of t he regulat ion
governing incom ing and out going cash at banks, in which banks are required
t o accept cash in denom inat ions of Rp 10,000 or less only if t he currency is
not fit for circulat ion.
?
The bank obligat ion t o subm it report s of it s proj ect ed cash collect ion and
deposit at BI as one st ep t ow ards effect ive and efficient cash m anagem ent .
1
?
Draft ing of Bylaws on cash deposit s and payout s as supplem ent ary rules t o
t he guidelines for t est ing of cash deposit s and payout s, t o be draft ed and
approved by banks t o st r eam line t he t r ial oper at ion of bank cash deposit s
and payout s. These Bylaws will be binding on all m em ber banks of a service
office.
?
Set up of a m ailing list for exchange of inform at ion am ong banks concerning
short or long cash posit ions.
?
Est ablishm ent of 12 bank focus groups, each under a bank act ing as
coordinat or, t o provide facilit at ion for problem s faced by individual banks.
La u n ch in g of Ca sh Ce n t r e s
The cash cent re st rat egy and policy for I ndonesia will be im plem ent ed in 3 ( t hree)
st ages as follow s:
?
Short - t er m : I m provem ent s t o cash handling act ivit ies as a forerunner for
operat ion of cash cent res t hrough t he im plem ent at ion of t rial cash deposit
and payout s at banks. At t his st age, Bank I ndonesia w ill also be requiring
banks t o handle deposit s of cash unfit for circulat ion.
?
Medium - t er m : Perform t he landscaping of banks and non- bank ent it ies t hat
can serve as precursors t o cash cent res and provide efficient , effect ive
service t o banks. This w ill t ake place w it hin a specified region w it h t he
int roduct ion of form al legal provisions on cash deposit s and payout s,
developm ent of inform at ion syst em s, m apping of local needs including t he
need
for
cash
cent res
and
t he
m echanism s
and
hum an
resources
qualificat ions for supervision of cash cent re ent it ies.
?
Long- t erm : Prepare for launching of cash cent res, am ong ot hers support ed
by: rules on operat ional m echanism s, such as t he set t lem ent syst em ,
supervision
and
exam inat ion
syst em ,
cash
processing
syst em
and
rem it t ances syst em t o ensure t hat cash cent res com ply wit h regulat ions and
t o im prove supervision.
2