CASEY STUDY 1

PERBANKAN SYARIAH
Oleh :
Maulana Zawawi (08020422052)
Naura Maghfiro (08020422061)

 Explain the difference between sanering and redenomination!

Redenomination is different from sanering. Sanering is a reduction in
people’s purchasing power through cutting the value of money and
usually sanering is carried out when economic conditions are not
healthy/stable, In this sanering, only the monetary value is deducted.
While redenomination is removing only the zeros, in the value of money
or goods. So redenomination can also be called a simplification of writing
the value of goods and services followed by a simplification of the means
of payment, namely money. Which in turn will be able to simplify the
accounting system in a payment system without causing losses and
negative impacts on the economy.

 Explain the countries which had implemented redenomination in the past, are
they success?
The success of redenomination is largely determined by various things that
are currently being studied, as has been done by several countries that have
succeeded in doing so. The redenomination is usually carried out when
inflation expectations are in the low range and movement is stable, economic
stability is maintained and there is guarantee for price stability as well as the
people’s needs and readiness.
There are several countries that have carried out redenomination, some have
succeeded in doing so and some have failed. The following are countries that
have successfully carried out redenomination namely Turkey, Romania,
Poland, and Ukraine.
1. Turkey
Turkey started implementing redenomination in 2005. The Lira (TL)
currency was converted to the new Lira with the YTL code. At that time,
the conversion of the old currency to the new was done by removing 6
zeros. The conversion rate is 1 YTL for 1,000,000 TL. The
implementation of redemonination in Turkey is carried out very
carefully. The process lasted for 7 years. In the process, the Turkish
government is very concerned about the stability of the domestic
economy. In the initial stage, the TL and YTL currencies circulated
simultaneously for a year. Then the old currency was withdrawn
gradually replaced by YTL. In the next stage, the term ‘Yeni’ on the new
currency was removed so that the YTL currency returned to TL with a
 redenominated value. Selama tahap redenominasi, keadaan
perekonomian tetap terjaga. Inflasi Turki pada tahun 2005 sampai
dengan tahun 2009 juga tetap stabil di kisaran 8-9%.

2. Romania
Redenomination was undertaken by the Government of Romania in 2005
to deal with high inflation in the 1990s. At that time Romania changed the
currency Lei with the code ROL to Leu with the code RON. Pruning
applies to the last 4 digits. In this way, 10,000 old Lei become 1 new Lei.
The government also enforces both currencies simultaneously. Stores are
required to display product prices in two different currencies. After that
the old Lei currency was withdrawn from circulation. The public can also
exchange old Lei for new Leu through banks. The redenomination
carried out by Romania was able to stabilize the value of the Leu
currency in 2002. This event is remembered as a symbol of the increasing
stability of the Romanian economy at that time.

3. Ukraine
Ukraine once redenominated in 1996. This step was taken because of
hyperinflation that occurred in the early 1990s due to the breakup of the
Soviet Union. The Ukrainian government at that time changed the
Ukrainian karbovanets currency to hryvnias. Simplification is done even
by simplifying the last 5 digits of the number, so that 100,000
karbovantsiv is replaced by 1 hryvina. Redenomination took effect for
both karbovanets and hryvnias in the transition period 2-16 September
1996. As a result, 97% of the karbovanets currency was successfully
withdrawn. Then after September 16, 1996, karbovanets that were still on
the market could be exchanged for hryvnias through banks.
As for countries that failed to implement redenomination, namely Russia, North
Korea, and Brazil.
The failure of these countries was caused by the wrong time. Redenomination
which should be carried out in stable economic conditions, it was actually
implemented by these countries when economic conditions were unstable and
had high inflation rates.

1.North Korea
North Korea cut off the zero in the won currency, from 100 won to 1 won
in 2009. The failure is the limited supply of new currency. The reason is,
when residents want to replace the old won money with new money, the
new money stock is not available.

2. brazil
The first time, Brazil made zero cuts in its currency in 1986. However,
Brazil had to fail. Not giving up, Brazil repeated itself in 1994. Brazil
simplified its currency from cruzeiro to cruzado.However, the currency
 exchange rate depreciated sharply against the US dollar, reaching
thousands of cruzados for every US dollar. This failure was because the
Brazilian government was unable to manage inflation, which at that time
still reached 500% per year. Brazil’s success in carrying out
redenomination in 1994 was achieved by going through a long process
and also the failures that have come before it.

3. Russia
The redenomination of Russia failed because the public saw this policy as
an indirect instrument of the government robbing the people's wealth.
One week after the Central Bank of Russia launched the redenomination
of the ruble, few Russians have actually seen the new notes. Meanwhile,
Russian politicians and media have declared the redenomination a success
Under this reform, the old 1,000 rubles were now worth one bar ruble.
Unfortunately, new banknotes would be introduced only gradually during
1998.

 Is redenomination urgent for todays Indonesian currency? If yes, explain the

steps we have to do.
The purpose of the redenomination is to strengthen the value of the rupiah,
stabilize the Indonesian economy through inflation, and finally strengthen
the economy. Does Indonesia need to redominate? Several survey bodies
declared that the rupiah was included in the category of currencies with very
low purchasing power. This shows the urgency of implementing
redenomination in Indonesia. if Indonesia wants to redominate, there are
several steps that must be done. that is :
 Comparative Study Period
 Socialization Period
 Transition period
 Substitution period
 Determination period

 Do you think Indonesia will surely gain credibility by redenomination?

When talking about the economy, there is nothing certain about
Indonesia redominating the rupiah. Especially with several considerations
that must be considered by Indonesia. The Rupiah Redenomination Bill
has been drafted in a medium-term draft by the Minister of Finance of
Indonesia, Sri Mulyani Indrawati. However, until now this plan has not
been realized. There are many obstacles that must be faced by Indonesia
before carrying out redenomination, such as the geographical location of
Indonesia, redenomination must be carried out when the country is in a
stable condition, the lack of literacy of the people in Indonesia. Will
Indonesia definitely gain credibility by redominating it? Probably not