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Many countries are already in various stages of developing their own central bank digital currencies (CBDC). Indonesia might soon become the latest to join the trend as it sees developing a digital version of rupiah as a way to combat the growing adoption of crypto.
Indonesia is considering developing a central bank digital currency (CBDC) as one way to counter the growing use of cryptocurrency in the country.
Bank Indonesia (BI), the central bank of the Republic of Indonesia, is increasingly concerned about the potential negative effects of crypto trading might have on the country’s financial system. At a recent, parliamentary meeting, BI Assistant Governor Juda Agung said that the monetary authority is considering launching a digital rupiah to “fight” against cryptos like Bitcoin (BTC), Cointelegraph reported.
“A CBDC would be one of the tools to fight crypto,” the Bank Indonesia executive said. “We assume that people would find CBDC more credible than crypto.”
While cryptos like Bitcoin are traded alongside commodity futures and subject to regulation by the trade ministry, the official pointed out that they could have severe impacts on the country’s financial system. “CBDC would be part of an effort to address the use of crypto in financial transactions,” Agung added.
The National Ulema Council (MUI), Indonesia’s authority on Shariah compliance, said in November that crypto is forbidden due to the elements of uncertainty and wagering, Coindesk reported. However, MUI head of religious decrees Asrorun Niam Soleh explained that crypto could be traded as a commodity if it demonstrates a clear benefit and abides by Shariah law.
The Indonesian government has been sending out mixed signals when it comes to crypto regulation. While it banned crypto payments in 2017, local authorities decided to keep crypto trading legal. In addition, the Commodity Futures Trading Regulatory Agency announced in April that it plans to a government-backed crypto exchange in the second half of 2021.
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