Indonesia’s monetary authority will soon issue the national fiat in digital form for use in wholesale transactions. According to Governor Perry Warjiyo, who provided a briefing on the topic on Thursday, it intends to publish the conceptual design of the new digital rupiah by the end of 2022.
He clarified, as Bloomberg reported: “The principle of digital rupiah will be the same as paper money which is to be the only legal currency for digital transactions in Indonesia.”
Since last year, Bank Indonesia has been researching the potential rollout of its central bank digital currency (CBDC). According to the paper, its primary goal is to foresee the widespread use of cryptocurrencies as a form of payment.
The central banks of Australia and the Philippines, two additional countries in the area, have investigated wholesale digital currencies as part of their considerations for using blockchain technology to facilitate transfers and settlements.
Last fall, trials of cross-border payments utilizing CBDCs were launched by Australia, Singapore, Malaysia, and the Republic of South Africa. According to the central banks of these nations, their collaboration aims to create shared platforms for cross-border transactions using various state-issued digital currencies.
With partners, Bank Indonesia is currently looking into technological possibilities and developing the digital rupiah’s cybersecurity characteristics. After being released, the CBDC will be given to central banks and payment processors, selling digital rupiahs to smaller financial organizations for use in various retail transactions.
According to Wellian Wiranto, an economist at Oversea-Chinese Banking Corp. in Singapore, this will be done to prevent potential bank disintermediation, particularly during times of crisis, or the risk that households would prefer to bank directly with the “risk-free” central bank rather than with commercial banks.
