The Bank of Indonesia has announced plans to issue a central bank digital currency (CBDC), becoming the latest global central bank to indicate a move towards a state-backed digital currency.
Noting the rupiah remains the only legal currency in Indonesia, the governor said the bank would regulate the proposed digital rupiah in the same way, across both card and cash transactions.
The bank has now turned its focus to studying the benefits of a digital currency, as well as the knock-on effect on payment systems and the wider monetary system, while addressing issues around the readiness of the financial infrastructure currently in place.
The Bank of Indonesia has yet to release a formal statement confirming its plans, but has noted that preparations are underway for the eventual release of a digital rupiah: “BI is currently still focusing on digital transformation as part of Indonesia payment systems blueprint 2025.”
Digital banking transactions in Indonesia have leapt by over 60% year-on-year, with the digital currency being issued against a backdrop of growing interest in digital currencies.
The news comes after last week’s announcement from the Indonesian financial regulator that plans were underway to tax capital gains from digital currency, alongside plans for a digital currency transaction tax put forward by the Commodity Futures Trade Regulatory Agency.
The move comes at a time of increasing efforts towards launching central bank digital currencies from central banks around the world, most notably in China where plans are already at an advanced stage of testing.
Digital currency in Indonesia was outlawed as a form of payment in 2017, despite digital currency trading remaining legal in the country, underlining the government’s mixed approach to regulating the sector.
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