Bank of Indonesia Makes Digital Rupiah Only Legal Tender
According to reports, the Bank of Indonesia (BOI) has been working on a CBDC project. The bank wants to introduce a wholesale CBDC (digital Rupiah), which can be used for online payments.
However, the digital Rupiah will be the only accepted digital currency for digital transactions. Also, the central bank is working to make sure entities can use it for cross-border payments.
BOI To Introduce Design Of Digital Rupiah Before End of 2022
The BOI is making headway on its CBDC project. The bank plans to issue an electronic version of its fiat currency for wholesale payments.
Furthermore, Perry Warjiyo, the BOI Governor, stated that the design for the CBDC will be out before the year ends. According to Bloomberg, Warjiyo added that:
“The digital Rupiah will share the same principle as the fiat currency. Also, it will be the only accepted legal currency in Indonesia for virtual transactions.”
In 2021, the BOI began its project on the possibility of launching a CBDC. The banks’ major goal is to surpass the adoption of crypto for payment purposes. It wants to release its own digital payment method.
Meanwhile, the financial authorities in other states have been exploring blockchain technology. They are looking for how to use it to enable settlements and transfers.
Besides, other central banks are also considering the idea of a wholesale CBDC. They include the central banks of Australia and the Philippines.
Other Central Banks Working On Cross-border Payment Using CBDC
Last fall, South Africa, Singapore, Malaysia, and Australia announced cross-border payment trials using CBDCs. The central banks in these nations had come together to work on cross-border payments.
Their goal is to develop a common platform where different countries can make international transactions. However, in this case, they will be using their state-issued CBDCs.
Furthermore, the central bank is also exploring various technological options with other states. It is currently working on improving the cybersecurity of the digital Rupiah.
Once it issues the CBDC, it will send it to various banks and payment providers. These entities will then sell the digital Rupiah to smaller financial institutions for retail transactions.
According to an economist in Banking Corp, Wellian Wiranto, this process is very important. This is because it will prevent any disintermediation among banks in periods of crisis.
Additionally, it will remove the possibility of households banking with the central bank and not commercial banks. This is because most individuals believe the central bank would be “risk-free.”
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