A COMPARATIVE ANALYSIS OF MACROECONOMIC IMPACTS, MARKET PSYCHOLOGY, AND STRATEGIC IMPLICATIONS OF DIGITALISE REDENOMINATION IN INDONESIA
DOI:
https://doi.org/10.62281/k7rkc062Keywords:
Banking Efficiency, Digitalise Redenomination, Redenomination, Signaling TheoryAbstract
Economic stability and banking efficiency, responding to the strategic discourse of the Indonesian Ministry of Finance as outlined in Minister of Finance Regulation (PMK) Number 70 of 2025. The main objective of this study is to analyse the determinants of redenomination success through a synthesis of the economic theories of Signalling, Menu Costs, and Money Illusion, as well as to fill the research gap related to the integration of this policy with Central Bank Digital Currency (CBDC). Using a systematic Narrative Review methodology, this study synthesises data from eight countries with extreme results: Turkey, Brazil, and Poland (successful); Ghana and Sierra Leone (mixed/risk); and Zimbabwe, Venezuela, and North Korea (total failure). The analysis shows that redenomination only succeeds in improving banking technical efficiency and lowering inflation expectations when implemented after macroeconomic stabilisation, not as a crisis solution. The main finding of this study is the empirical validation that "virtual" transition mechanisms, such as the Unit of Real Value (URV) in Brazil, can be adopted through the concept of "Digitalise Redenomination" using the Digital Rupiah in Indonesia to mitigate money illusion and menu costs.
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