Central Bank of Indonesia Plans to Release Blockchain-Based Rupiah

The Central Bank of Indonesia has recently announced that it is working to issue a wholesale digital rupiah which is meant to be the only legal tender for digital transactions in the country. The regulator also added that it wants to ensure that the digital currency will be exchangeable across borders.

The Bank of Indonesia has been studying the possible launch of its central bank digital currency (CBDC) since last year. Its main intention is to stay ahead of the global adoption of cryptocurrency as a payment method. This was revealed in a briefing recently by the Governor, Perry Warjiyo, wherein he stated that,

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.

Monetary authorities of other nations in the region have also been looking into implementing blockchain technology to improve transfers and settlements. These authorities include the Bank of Philippines and Australia, which are considering wholesale digital currencies as well.

Bank of Indonesia is currently exploring technical options with counterparts and is working on the cybersecurity aspects of the digital rupiah. Once the CBDC is issued, it will be distributed to large banks and payment service providers, which will in turn sell the digital rupiahs to smaller banking institutions. This will then enable various retail transactions.

Economist at Oversea-Chinese Banking Corp in Singapore, Wellian Wiranto, explained that banks will be included in the distribution to avoid the potential disintermediation of banks, especially in times of crisis, or the risk that households would prefer banking directly with the risk-free central bank rather than commercial banks.