Indonesia’s Central Bank Prepares to Launch the Digital Rupiah
- Currently, the bank is in the cybersecurity phase of the Digital Rupiah launch.
The Indonesian central bank recently announced plans to release a wholesale digital version of the nation’s fiat currency dubbed the Digital Rupiah. According to the Central Bank, the digital Rupiah will be acceptable all over the country for payment settlement.
The apex bank also announced that it is discussing with other nations to enable cross-border utility for the digital Rupiah.
Indonesia and the Digital Rupiah
Indonesia’s financial regulator has been researching the development of a national digital currency since 2021. Its primary goal is to be ahead of many other nations in the wider adoption of digital currencies as legal tender.
The central bank governor (Perry Warjiyo) made these remarks in a recent briefing on Thursday. Warjiyo said, “the digital and the paper Rupiah will operate under the same principles. The digital Rupiah would be the only means of completing digital transactions in Indonesia.” Financial regulators in other countries have also been researching blockchain technology to develop the wholesale digital version of their fiats.
The goal of the CBDC is the same across all these nations – facilitating transactions and financial settlements. The Central banks of Australia and the Philippines are among the nations researching the development of wholesale digital currencies. Currently, Indonesia’s apex bank is discussing technical aspects with counterparties.
It is also discussing the cybersecurity elements of the national digital currency with these counterparties. Once the digital Rupiah is released, the central bank will distribute it to large banks and payment service providers. Then, these two financial institutions will sell this CBDC to smaller financial institutions.
It is these smaller financial institutions that make it available to small retailers. Wellian Wiranto, a top economist at Singapore’s overseas-Chinese Banking Corp, stated that banks must distribute the CBDC to avoid risks associated with excluding banks from a finance-related system.
He added that the bank’s role in the distribution process would become especially important during a crisis. Wiranto further said financial inclusion is another advantage of including banks in the distribution process. He explained that many households prefer to bank directly with a risk-free central bank instead of commercial banks.
Last November, Indonesia’s apex bank recommended CBDC as the best way to ban ‘haram’ cryptos for financial settlement. Before making this statement, the central bank had consulted with the national ulema Council (MUI). The MUI is a religious body that enforces shariah law on matters concerning Islamic finance.
In 2021, the MUI declared crypto as a haram for Muslims because it bears similarities to gambling and can cause harm and uncertainties. Hence, it forbade its members from being crypto holders. It is a proven fact that Indonesia’s Muslim population is the largest worldwide.
The MUI said it would only lift the ban once it had proof of the benefits associated with cryptos. Nonetheless, Indonesian authorities haven’t stopped crypto and commodity futures trading. However, the trade ministry regulates operations in those sectors.
Rebecca is a Senior Staff Writer at BitcoinWisdom, working hard to bring you the latest breaking news in the cryptocurrency market. In the words of Elon Musk “Buy stock in several companies that make products & services that *you* believe in. Only sell if you think their products & services are trending worse. Don’t panic when the market does. This will serve you well in the long-term.”
