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Bank Indonesia in 'no hurry' over digital currency. What's it all about?
Central bank digital currency (CBDC) could help the country formulate data-driven regulations, avoid inflation, reduce counterfeit money and terrorism financing, but nationwide adoption would be a challenge. So what is CBDC, and what are its pros and cons for Indonesia?
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The Bank Indonesia logo adorns the front gate of the central bank on Jl. Thamrin in Central Jakarta in this file photo. (The Jakarta Post/Rafaela Chandra)
B
ank Indonesia (BI) is mulling over the idea of creating rupiah-denominated digital currency in line with the global trend, but Indonesian stakeholders and observers have told The Jakarta Post that the plan had a long way to go despite the potential benefits.
According to the Bank for International Settlement (BIS), 86 percent of central banks across the globe are engaging in activities related to central bank digital currency (CBDC), with many still in the experimental stage.
These activities are a response to the rising adoption of cryptocurrencies such as Ethereum, Dogecoin and, the largest by market capitalization, Bitcoin.
While some countries like China and Sweden have seen positive feedback on their CBDC trials, others have fallen short. Among the latter is Ecuador, which shut down its “Dinero Electrónico” (electronic money) or retail CBDC, just four years after it was launched in 2014 due to low national adoption.
“We are not in a hurry to issue the CBDC,” BI executive communications director Erwin Haryono told the Post on March 8. “Because this is such a new thing, […] we will be very careful and conservative when we implement it later.”
Seeing the mixed results of CBDCs, how might one fare in Indonesia?
What is CBDC?
