Bank of Indonesia is one of the latest global central banks to announce government plans for digital currencies while the country’s digital payments have skyrocketed.
Governor Perry Warjiyo said that on Tuesday The Indonesian Central Bank is planning to introduce a digital rupiah currency as a legal payment instrument in IndonesiaReuters reports.
The official noted that the rupee is the only legally accepted currency of payment in the country and BI will attempt to regulate the digital rupee in the same way that it regulates cash and card transactions.
According to Warjiyo BI is now exploring the potential benefits of a digital rupee, including its impact on monetary policy and payment systems, as well as financial infrastructure readiness.. The bank is also examining possible technology options for building a central bank digital currency. At a broadcast press conference, the official did not give an exact timetable for the development of the digital rupee.
At the time of writing, BI does not appear to have released an official statement regarding its plans for a CBDC. According to a notice on an official bank website, BI will decide on issuing a digital rupee in the near future as the necessary preparations have been completed. “Currently, BI continues to focus on digital transformation as part of the Indonesian payments system plan for 2025,” the statement said.
According to the message, Indonesia’s entry into the global CBDC race is in response to a surge in digital banking with an annual frequency of more than 60% for digital transactions. Digital payments are one of the country’s top political priorities after Indonesia saw strong growth in online transactions during the COVID-19 pandemic.
The latest news follows Indonesia’s financial authorities who last week announced possible tax systems for capital gains from cryptocurrencies. Before, Indonesia’s commodity futures trading regulator also considered imposing a tax on all cryptocurrency transactions that take place on domestic cryptocurrency exchanges.
Indonesia is known for its mixed approach to regulating cryptocurrencies, as the country banned cryptocurrency payments in 2017, despite the fact that trading in cryptocurrencies is legal.