Indonesia to issue “digital rupiah” for wholesale transactions

Indonesia’s central bank will issue its own digital currency for use by banks and payment services providers on the wholesale level, Perry Warjiyo, governor of the country’s central bank, said in a briefing on July 21, according to Bloomberg News. The “digital rupiah” will be a digital version of the national fiat money rather than a more sophisticated cryptocurrency. “The principle of the digital rupiah will be the same as paper money which is to be the only legal currency for digital transactions in Indonesia,” Warjiyo said, adding that the central bank is also looking into solutions to make it…

Indonesia’s central bank will issue its own digital currency for use by banks and payment services providers on the wholesale level, Perry Warjiyo, governor of the country’s central bank, said in a briefing on July 21, according to Bloomberg News.

The “digital rupiah” will be a digital version of the national fiat money rather than a more sophisticated cryptocurrency.

“The principle of the digital rupiah will be the same as paper money which is to be the only legal currency for digital transactions in Indonesia,” Warjiyo said, adding that the central bank is also looking into solutions to make it exchangeable across borders.

Issuance planned for the end of this year

Plans are to release the conceptual design of the future digital rupiah by the end of 2022.

Bank Indonesia has been studying the possible launch of its central bank digital currency since last year. Its main intention is to get ahead of the global adoption of cryptocurrency as a payment method, the report notes.

Currently, various technology options and cybersecurity features for the digital currency are explored. Once issued, it will be distributed to large banks and payment service providers, which will in turn sell digital rupiahs to smaller banking institutions for various retail transactions, the central bank said.

Other countries look into cross-border transfers with crypto

Indonesia is not alone with the idea to use digital central bank money for cross-border trade. Australia, Singapore, Malaysia, the Philippines and South Africa are all considering or already undergoing trials of cross-border payments with the blockchain-based technology.

The central banks of these countries said the goal of their cooperation was to develop shared platforms for international transactions using different state-issued digital currencies in order to improve and accelerate transfers and settlements.