The central bank of Indonesia has ordered supervisors to monitor banks in the country, in a bid to make sure the national ban on digital currency payments is being upheld in practice.
The central bank governor, Perry Warjiyo, said during a virtual seminar that local institutions and payment providers are still banned from facilitating or accepting payments in digital currency, suggesting these are “not legitimate payment instruments under the constitution, Bank Indonesia Law, and Currency Law.”
He said that the bank would be sending out field supervisors to ensure the measures were being upheld nationwide, with significant penalties in force for those who fail in their duty of compliance.
The ban on digital currency payments came in as far back as late 2017, after the central bank decided to halt payment processors that support digital currency a year previous. However, despite the ban at the central bank level, Indonesia’s Commodity Futures Trading Regulatory Agency set out regulations in early 2019 that gave effect to digital currency as a speculative commodity, creating options around the trade in digital currency derivatives at local exchanges.
The specific guidelines set out provisions regulating “the trading of crypto assets as commodities that could become the subject of futures contracts and other derivative contracts traded in the stock market.”
The latest announcement follows a week after it was announced that Bank Indonesia was working on issuing a central bank digital currency, or CBDC, in keeping with a number of other countries around the world. It comes as digital payments in the country have grown by 60.3% over the past year, with settlement values peaking at $217.4 billion.
The central bank said on social media that its state-backed currency aligns with the policy of greater digitization of the economy, and would tie in with the overall monetary objectives of the bank.
In preparing a CBDC, the bank joins central banks accounting for some 20% of the global population in advancing plans for a central bank digital currency rollout.
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