Do Rupiah Coins Have Any Value? A Cross Country Comparison and Evaluation of Rupiah Denominations
DOI:
https://doi.org/10.21512/jas.v12i2.11321Keywords:
Money demand, Rupiah coin, purchasing power, Big Mac, D-MetricAbstract
Payment system innovation has grown exponentially in numerous nations, raising the prophecy of cash becoming obsolete. However, this is not the prevailing situation in Indonesia, where currency is widely used across the archipelago. In recent decades, the need for cash in circulation has risen steadily, even during the COVID-19 pandemic. The possible economic ramifications of rejecting coins in circulation in some cases render the ongoing discussion a significant concern. Therefore, in this study, we thoroughly examine the existence of Rupiah coins in terms of their buying power, denominational structure, and comparative analysis with other countries. The analysis of denomination structure concerning the present and future inflation rate, represented by the average of minimum wages, is conducted utilising the D-Metric and a univariate regression. A comparative analysis is performed using a global product index, and the denomination structure of the Rupiah coin is examined in comparison to the denomination structures in several ASEAN countries and other nations. Our findings indicate that the denomination structure of Rupiah coins has been unsuitable for the current economic situation since 2013. The results are of great importance, as they support policies that improve the usefulness of Rupiah coins for economic transactions and reduce production costs.
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