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Bank Indonesia Prepares to Issue Digital Rupiah as Legal Tender for Digital Payments

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The Central Bank of Indonesia is working on issuing a wholesale digital rupee. The new currency should become the only legal tender for digital transactions in the country, while the regulator also wants to ensure it can be exchanged abroad.

Digital rupee concept expected by the end of the year

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The Indonesian Monetary Authority is promoting a project to issue a digital version of the national fiat for wholesale transactions. It plans to release a concept design for the future digital rupee by the end of 2022, Governor Perry Varjiyo said at a briefing on Thursday. According to Bloomberg, he elaborated:

The principle of the digital rupee will be the same as paper money, which should be the only legal currency for digital transactions in Indonesia.

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The Bank of Indonesia is exploring the possible launch of its central bank’s digital currency (CBDC) since last year. The report notes that its main goal is to get ahead of the global adoption of cryptocurrency as a payment method.

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Monetary authorities in other countries in the region are also considering implementing blockchain technology to improve transfers and settlements, including the central banks of the Philippines and Australia, which are also considering wholesale digital currencies.

Last fall, Australia, Singapore, Malaysia, and South Africa announced trials of cross-border payments using CBDCs. The central banks of these countries have stated that the goal of their cooperation is to develop common platforms for international transactions using various government digital currencies.

Bank Indonesia is currently exploring technology options with partners and working on digital rupiah cybersecurity features. Once issued, the CBDC will be distributed to major banks and payment service providers, who in turn will sell digital rupees to smaller banking institutions for various retail transactions.

Wellian Wiranto, an economist at Oversea-Chinese Banking Corp in Singapore, explained that this would be to avoid the potential for bank intermediation to be avoided, especially in times of crisis, or the risk that households would prefer banking directly with a “risk-free” central bank. . banks, not commercial banks.

Do you expect Bank Indonesia to release its wholesale digital currency by the end of the year? Tell us in the comments section below.

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Credit : news.bitcoin.com

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