Indonesia Central Bank to Issue Digital Currency

Indonesia Central Bank to Issue Digital Currency

July 23, 2022 0 By Jeanine Sanchez

Indonesia’s central bank is getting set to introduce the digital Rupiah to the country’s economy. It will be the only permitted digital means of exchange in the country. The central bank is also working to make sure it can be exchanged between borders.

Digital Rupiah Due by Year’s End

The monetary authority in Indonesia is moving ahead with its plan of issuing the digital currency. The national fiat currency’s digital version is first targeted at settlement for wholesale deals. 

The central bank’s governor said the digital Rupiah’s design will be released by year end. Governor Warjiyo Perry said the principle will be the same as the physical currency. He emphasized that it will be the sole legal tender for electronic transactions.

The central bank has been working on the possibility of launching its CBDC since 2021. Its primary plan is to be ahead of the wave of cryptocurrency adoption globally. This was stated in the bank’s report.

Monetary authorities of other countries in the same region are also considering the same move. They plan on integrating blockchain tech in improving settlements and transfers. This includes the central banks in Australia and the Philippines, considering digital currencies too.

Malaysia, Singapore, Australia, and South Africa announced their intentions to try cross-border settlements with CBDCs. Their central banks said the goal is to create a unified platform for international payments. The platform will be able to use different state digital currencies.

The CBDC Value Chain

The Bank of Indonesia is trying out technological options alongside counterpart banks. It is also working on building the cybersecurity offerings of the digital currency. The CBDC will be sent to payment centers and large banks when issued.

They will then sell the digital currency to smaller banks over various transactions. An economist, Wellian Wiranto, said the process will help avoid banks’ disintermediation. This is necessary in the event of crises.

It will also remove the possibility of users choosing to bank with the central bank directly. This happens when they avoid commercial banks for risks.

The concept of a CBDC extends beyond the Australia-Indonesia region. Other countries in Africa and South America are weighing the idea. 

Other countries, on the other hand, are absolutely permitting other cryptocurrencies. Various states are working on implementing crypto policies to keep a track.