The national fiat will soon be issued in digital form by Indonesia’s monetary authority for use in wholesale transactions. As per Governor Perry Warjiyo, who provided a briefing on the topic on Thursday, it intends to publish the initial design of the new digital rupiah by the end of 2022.
Since last year, the Bank of Indonesia has been researching the potential introduction of its central bank digital currency (CBDC). According to the paper, its major goal is to forecast the widespread use of cryptocurrencies as a form of payment.
“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.”
The central banks of Australia and the Philippines, two additional countries in the neighbourhood, have been examining wholesale digital currencies as part of their considerations for using blockchain technology to facilitate transfers and settlements.
Last fall, trials of cross-border payments involving CBDCs were launched by Australia, Singapore, Malaysia, and the Republic of South Africa. The aim of their collaboration, according to the central banks of these nations, is to create shared platforms for cross-border transactions using various state-issued digital currencies.
This will be done, according to Wellian Wiranto, an economist at Oversea-Chinese Banking Corp. in Singapore, 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.
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 major banks and payment processors, who will then sell digital rupiahs to smaller financial organisations for use in a variety of retail transactions.