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‘Digital rupiah’ won’t cut out banks, fintech, BI claims
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Bank Indonesia Governor Perry Warjiyo speaks during the central bank’s annual meeting with financial stakeholders in Jakarta on Nov. 30. (Reuters/Willy Kurniawan)
B
ank Indonesia (BI) has said its plans to establish a central bank digital currency (CBDC) will not disrupt existing banking and digital payment systems, as it seeks to elbow out cryptocurrencies and pave the way for cooperation with other monetary authorities.
The central bank announced on Monday that it would not offer interest rates on the so-called “digital rupiah” to avoid creating “head-to-head” competition with financial products created by banks, namely savings and time deposits.
BI sought to assure banks that the digital rupiah would not affect the liquidity required by the sector, as the currency would be similar to the physical banknotes that already existed in the financial system.
“We will make sure that disintermediation risk can be minimized,” Ryan Rizaldy, BI’s head of payment system policy, told reporters on Monday.
Disintermediation refers to cutting out a middle agent in a business process.
BI said it would include non-bank financial institutions, such as fintech and digital wallet firms, as wholesalers in the CBDC system alongside conventional banks, which will be BI’s main target for distribution of the digital rupiah.
“We will retain what is already in the system. We will still open ways to level the playing field between banks and non-banks,” Ryan said.
