The Indonesian government has joined the crypto-fence bandwagon.
On Wednesday, Bank Indonesia announced the launch of a trial run for the Digital Rupiah.
The initial version of the Digital Rupiah will be accessible as wholesale CBDC.
Indonesian Digital Rupiah will undoubtedly experience massive adoption as a result of strong digital currency investment stats.
Their own trial versions of Central Bank Digital Currency (CBDC). In line with this, Indonesia also announced the launch of the Digital Rupiah trail run.
In May 2021, Bank Indonesia Governor announced that, in light of the growing trend toward digital payment mechanisms, they would pursue the launch of a Digital Rupiah. BI announced in a BIS note in 2022 that it will consider both retail and wholesale CBDC options.
As a first step, on November 30, 2022, Bank Indonesia issued a white paper on the development of the Digital Rupiah. The White Paper detailed the high-level design for Digital Rupiah under the hood of Project Garuda and initiated public communication about the Digital Rupiah development strategy.
However, Indonesia currently prohibits the use of cryptocurrencies as a form of payment but allows digital asset transactions in the commodity futures market for investment purposes.
At an event on Nov 30, Governor Perry Warjiyo stated that “Digital Rupiah will be introduced in stages, beginning with wholesale CBDC for issuance, elimination, and transfer between banks.”
As the BI Governor announced that the trial run of the Digital Rupiah will be launched in stages. The initial version or stage of the Digital Rupiah will be introduced as wholesale CBDC, which is used for the issuance, elimination, and transfer of CBDC between banks.
The next stage will be to develop the Digital Rupiah's business model for monetary operations and the money market, said Warijyo. And at last, a retail version of Indonesian CBDC for everyday use will be developed.
BI also issued a statement noting that developing a CBDC in Southeast Asia requires the participation of stakeholders in order to perform trial runs. Meanwhile, the Central Bank did not provide an estimated launch date for the CBDC business model.
In the past two years, Indonesia has witnessed massive adoption and an exponential increase in digital currency investment. Moreover, according to BI statistics, digital banking transactions in Indonesia have increased by double digits in recent years, with transactions expected to increase by 30% to 53,144 trillion Rupiah ($3.38 trillion) in 2022.
In Asia, not just Indonesia, but also India and Japan, are testing their own versions of CBDC. This will increase the confidence among the general people about the adoption of a central bank-backed digital currency.
What do you think, will Indonesia witness widespread adoption of the Digital Rupiah or will we witness a replica of the Nigerian CBDC case? Share your views in the comment section below.
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