Indonesia’s central bank has announced that it will be upping the ante in its efforts to develop a central bank digital currency (CBDC) with the release of a white paper detailing the plans for the launch of the digital rupiah.
The CBDC project has been dubbed Project Garuda, which the central bank says is designed to “safeguard the sovereignty of the Rupiah in the digital era.” Project Garuda will be released in three phases, with a wholesale CBDC being the major priority of Bank Indonesia (BI), according to the white paper.
A wholesale CBDC relates to the settlement of interbank transfers and transactions related to transactions in central bank reserves. Proponents of wholesale CBDCs have pointed to their potential to improve payments and securities settlement efficiency as a reason for their development.
The whitepaper shed light on the end-to-end integrated design configuration, technology architecture, and the regulatory and policy considerations for the digital rupiah design.
The central bank says that the CBDC will complement existing banknotes and coins and will develop “national financial systems and the integration of national digital economy and finance.
According to the white paper, each development stage will begin with public consultations made up of consultative papers and focus group discussions. After the public talks, technical experimentation will start and comprise proof of concept, prototyping, and a pilot. Each successful stage will conclude with a policy stance review to gauge the standing of the Indonesian legal framework.
The long list of CBDC projects
Project Garuda is just one out of the litany of CBDC projects undertaken by central banks worldwide. Over 50 nations have disclosed a CBDC pilot to prevent shadow banking and to reduce the rising cases of cryptoization in their local economies.
“Most central banks are still mindful before taking a decision to issue a CBDC for the public,” said Indonesia’s central bank. “There is no one-size-fits-all solution in the development of CBDC as each country has its own unique characteristics and specific policy contexts.”
China’s digital yuan has emerged as one of the widely anticipated CBDCs, given the extensive tests in real-world scenarios and the impressive metrics it has garnered over the years. Transaction volume for the digital yuan surpassed $13 billion, while 261 million individuals have downloaded its digital wallet.
Nigeria’s CBDC, the e-naira, recorded less than impressive metrics, which the central bank governor blames on commercial banks stifling its adoption.
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