As of July 1st, Indonesian banks and businesses can no longer accept foreign currencies. Stable currencies, with the
US dollar leading the pack, were widely used across the country to sidestep fluctuations in the Indonesian Rupiah (USD1=IDR13,300).
New rules brought in by Bank Indonesia, the central bank, with the aim of re-enforcing ‘macro-economic stability‘ in the country.
The stability of the US dollar and the euro also makes them appealing to financial criminals, from black marketeers to bribe payers. In Indonesia, paying for a hotel in USD, or other luxury goods or services, was widespread. Dollars and euros come in higher value denominations and are easier to transport. The ban on using foreign currency for domestic transactions within Indonesia will have some impact on financial crime. How will the drug lords and corrupt officials spend their cash in Bali and Jakarta if the can’t use dollars? It will be interesting to see how this is enforced and to what extent. Will the first people to be prosecuted be the high-rollers who live by the dollar? Or smaller businesses and individuals trying to save a few rupiah?