The central bank of Indonesia views a CBDC as a more sophisticated financial instrument than private cryptocurrencies.
Indonesia’s central bank is prepared to launch a digital version of its national currency in order to “combat” private digital assets. According to the banking institution, a CBDC would be more “credible” than bitcoin or other cryptocurrencies.
Bank Indonesia (BI), the country’s central bank, announced earlier this year its plan to develop a central bank digital currency (CBDC). Governor Perry Warjiyo said in May that it is on its way, but did not provide a particular debut date.
BI highlighted at the time that residents moved from cash to digital payments amid the COVID-19 outbreak. As such, the institution concluded that a CBDC that is supervised and regulated by the government would be the greatest alternative for that monetary transformation.
Bloomberg reported recently that Bank Indonesia now has another incentive to create a digital rupiah: to “combat” cryptocurrencies that are having a substantial influence on the country’s financial network. Juda Agung, the bank’s Assistant Governor, noted that a CBDC is a more secure choice than bitcoin, ether, and the other private digital assets:
“A CBDC would be one instrument in the battle against cryptocurrency. We believe that consumers will see CBDC as more credible than cryptocurrency. CBDC would be a component of a larger effort to address cryptocurrency usage in financial transactions.”
Meanwhile, the Indonesian government aims to establish a specialised digital asset exchange by the end of 2021, citing the country’s over 7 million crypto investors and $30 billion in transaction value. In contrast, residents spent roughly twice as much in the space in 2020.
Cryptocurrency Is ‘Haram’ Indonesian
A few weeks ago, the National Ulema Council (MUI) – Indonesia’s leading Islamic scholar organisation – took a stridently unfavourable attitude against cryptocurrencies, labelling all industry activities “haram,” or banned.
According to Asrorun Niam Soleh, the rejection stems from the idea that bitcoin and other currency are plagued by “uncertainty, gambling, and injury.” Nonetheless, the Chairman of the MUI’s Fatwa Commission clarified that digital assets may be exchanged like commodities provided they adhere to Shariah law and have a “clear advantage.”
Indonesia is the world’s most populous Muslim-majority country, with a population of more than 273 million. Having said that, the initiative has the potential to have a major impact on the local bitcoin industry.
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