Bank of Indonesia to Develop a Digital Currency Strategy to ‘Combat’ Cryptocurrency

The Indonesian Central Bank is considering a digital rupiah as a cryptocurrency rival. This is happening as it is weighing whether to issue such a tender according to a senior official.

During a parliamentary session, Juda Agung, the assistant governor at the Central Bank of Indonesia, stated that digital assets are traded alongside  commodity futures. Despite the fact that they have a significant influence on the financial system, according to a Bloomberg report, the assets are controlled by the trade ministry.

In May, Indonesia announced its intention to release a Central Bank Digital Currency (CBDC).  The nation has set improving digital payments as a top policy objective. This comes after the coronavirus outbreak, when there was a significant increase in internet transactions.

According to Juang, a CBDC would be a valuable weapon in the war against Bitcoin. They believe that individuals will trust the CBDC more than cryptocurrency. The CBDC would also be involved in their strategy to combat cryptocurrency use in financial dealings

Indonesian Cryptocurrency dilemma

The central bank’s reticence to cryptocurrencies may only cause more worry for those who wish to invest in them. This came shortly after the National Ulema Council of Indonesia, an important Islamic body, declared bitcoin to be haram in late October.

The volatility of cryptocurrency, according to them, makes it an impossible investment project as reported  by The Coinrise. The council holds the authority on Shariah compliance in the country which is home to the world’s largest Muslim population.

The Indonesian Commodity Futures Trading Regulatory Agency of the Ministry of Trade is reported to have stated plans to establish a government sponsored crypto exchange in the second half of 2021. As many as 6.5 million Indonesians are invested in crypto assets. This is outdone by Indonesia’s stock market, which has 5.7 million individual retail investors as of May 2021.