Bank Indonesia (BI) has confirmed plans to move ahead with exploring a central bank digital currency (CBDC) in 2024, with full-scale trials in partnership with leading commercial banks.
Business Times reported that BI’s CBDC plans will focus on wholesale interbank settlement using blockchain technology. Indonesia’s proposed CBDC—the digital rupiah—has undergone previous studies culminating in the completion of a proof-of-concept back in 2022.
This year’s pilot will see the banking regulator probe technological and regulatory architecture to roll out the digital rupiah.
“We have issued the proof-of-concept for the digital currency and we expect to design the technology and infrastructure we will be using in the near future,” BI Governor Perry Warjiyo.
The incoming pilot builds on a trove of data obtained from a public consultation involving key industry stakeholders. The results from the consultation shut down hopes of a retail CBDC offering, with Warjiyo describing the focus on wholesale offering as key to maintaining the “rupiah’s sovereignty in the digital era.”
The BI has since enlisted an army of commercial banks and technical partners to assist in its CBDC pilot. Apart from local interbank payments, the central bank’s pilot will experiment with cross-border settlements, tokenizations, and use cases in foreign exchange transactions and the metaverse.
Indonesia’s central bank reportedly pursues interoperability with CBDCs from other jurisdictions, hinting at a phased rollout. For starters, the bank disclosed it would launch a digital rupiah for monetary operations and the money market before proceeding with a retail CBDC.
“We will also push for the downstream project of the government and several other policies,” said Warjiyo in February 2022.
Stricter digital asset rules
Indonesian regulators are tightening the screws for digital currencies as they throw their weight behind the rollout of a CBDC. The country is exploring plans to classify digital currency as securities while mandating exchanges to ensure a clear separation of funds to prevent the commingling of assets.
A resolution by the Ministry of Trade mandates two-thirds of the directors of digital exchanges to be domiciled in Indonesia as part of the regulatory changes hitting the industry. Indonesia has since floated a national digital currency exchange to encourage uniformity rather than an outright ban on the asset class.
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