The Central Bank of Indonesia will issue the concept of a national digital currency (CBDC) before the end of 2022. Reported by Bloomberg citing department head Perry Vargio.

Bank of Indonesia is preparing to issue a digital rupee for interbank and international transfers. Now the department is working on the cybersecurity of the financial instrument.

“The digital rupee will be equivalent to fiat money and will be the only legal currency for digital transactions in Indonesia,” Vargio said.

The Central Bank plans to distribute CBDC to large banks and payment service companies, and they will collaborate with small financial institutions for retail transactions.

This will avoid the classic problem disintermediationOversea-Chinese Banking Corp. “Especially during a crisis, when households prefer to transact directly through a “risk-free” central bank rather than traditional banks,” said economist Wellian Wiranto.

The Central Bank of Indonesia first announced its plans to issue a CBDC in 2018. In May 2021, the regulatory body confirmed its intention, without specifying a launch date.

In November, the agency described the introduction of the digital rupee as one of the ways to fight cryptocurrencies in the country. The central bank has declared the CBDC “a more reliable alternative.”

Recall that in 2021 Indonesian financial institutions were banned from using bitcoin and other digital assets as a means of payment.

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