Bank Indonesia (BI) is moving forward with its plans to explore a central bank digital currency (CBDC) in 2024, and is set to conduct full-scale trials in collaboration with major commercial banks.
According to Business Times, BI’s CBDC initiative will primarily focus on wholesale interbank settlement using blockchain technology. The proposed CBDC, known as the digital rupiah, has already undergone extensive studies, including the successful completion of a proof-of-concept in 2022.
In addition, BI Governor Perry Warjiyo has announced that this year’s pilot program will involve a thorough examination of the technological and regulatory framework required for the rollout of the digital rupiah.
Warjiyo emphasized that the decision to concentrate on a wholesale offering stems from the necessity to uphold the sovereignty of the rupiah in the digital era, based on insights gathered from a public consultation involving key industry stakeholders. The central bank has enlisted the support of commercial banks and technical partners to aid in the CBDC pilot, which will explore areas such as local interbank payments, cross-border settlements, tokenization, and use cases in foreign exchange transactions and the metaverse.
Indonesia’s central bank is also seeking interoperability with CBDCs from other jurisdictions, indicating a phased rollout approach. Initially, the bank plans to launch a digital rupiah for monetary operations and the money market before considering the introduction of a retail CBDC.
In February 2022, Warjiyo expressed the intention to align the CBDC initiative with government projects and policies. Notably, the Indonesian regulators are tightening rules for digital currencies, aiming to classify them as securities and enforce stricter measures on digital exchanges to prevent asset commingling. Additionally, a new resolution mandates that a majority of digital exchange directors must have Indonesian residency, reflecting the evolving regulatory landscape in the country. Indonesia is also contemplating the establishment of a national digital currency exchange to promote consistency rather than imposing an outright ban on digital assets.
