A wholesale digital rupee is being issued by the central bank of Indonesia. While the new currency will serve as the sole legal tender in digital transactions, the regulator wants it to also be usable internationally.
Digital Rupiah Concept to be Developed by the Year End
Indonesia’s monetary authority is advancing with a project to issue a digital version of the national fiat for wholesale transactions. The future digital rupeeh will be released by 2022 according to Governor Perry Warjiyo in a Thursday briefing. He elaborated as Bloomberg quoted him:
It will work in the exact same way as traditional paper money. This is Indonesia’s only legal cryptocurrency for digital transactions.
Since last year, Bank Indonesia has been researching the possibility of launching its central bank’s digital currency (CBDC). According to the report, its primary goal is to advance the adoption of cryptocurrency in payment systems around the world.
The central banks in other countries of the region, such as Australia and the Philippines have been exploring blockchain technology to enhance transfers and settlements.
Australia, Singapore Malaysia and Republic of South Africa have announced cross-border trials of CBDCs in last fall. These central banks stated that their collaboration was intended to create shared platforms for international transactions with different digital currencies.
Bank Indonesia is exploring technological options and working with other banks to improve the security features of its digital rupeh. The CBDC will once issued be distributed to major banks and payment service providers. They will then sell digital rupehs to small banking institutions to facilitate various transactions.
Wellian Wiranto, economist at Oversea-Chinese Banking Corp in Singapore, explained that this will be done to avoid potential disintermediation of banks, especially in times of crisis, or the risk that households would choose to bank directly with the “risk-free” central bank rather than commercial banks.
Are you optimistic that Bank Indonesia will issue its digital currency wholesale by the end the year? Leave your comments below.
Images CreditsShutterstock. Pixabay. Wiki Commons. Mang Kelin
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