According to the Bank of Indonesia, central bank digital currencies (CBDC) will be a crucial weapon for countering cryptocurrencies which have been seen to cause a catastrophic effect on the financial system of a nation.
At a recent legislative meeting, Bank of Indonesia’s assistant governor Juda Agung indicated the central bank is considering releasing a digital rupiah to “combat” cryptocurrencies like Bitcoin (BTC).
“One of the weapons to combat crypto would be a CBDC. We believe that CBDC is more trustworthy than cryptocurrency. According to a Bloomberg story from Nov. 30, CBDC will be “part of an effort to address the usage of cryptocurrency in financial transactions.”
Despite their catastrophic effects on the financial system, cryptocurrencies such as Bitcoin are currently traded alongside commodities futures and controlled by the trade ministry, according to the source.
The news comes after Indonesia’s leading Islamic scholarly body, the National Ulema Council (MUI), purportedly declared cryptocurrencies like Bitcoin to be haram, or forbidden, under Islamic teachings. In late October, the East Java chapter of one of MUI released a statement declaring the use of cryptocurrency haram.
The Indonesian government has maintained a mixed approach on cryptocurrency legislation, as previously reported. Despite the fact that municipal governments banned bitcoin payments in 2017, they have decided to keep cryptocurrency trading lawful.
Indonesia’s Ministry of Trading’s Commodity Futures Trading Regulatory Agency (Bappebti) reportedly revealed plans to build a government-backed crypto exchange in the second half of 2021 in April 2021.
While Indonesian regulators have a mixed attitude about cryptocurrency, they are increasingly considering a CBDC. Governor Perry Warjiyo of the Bank of Indonesia revealed plans to introduce a digital rupiah as a legal payment instrument in Indonesia in May.
One of the primary aspects of CBDCs like the Chinese digital yuan appears to be to limit bitcoin adoption. Indonesia isn’t the only country that believes CBDCs can assist governments tackle cryptocurrency.
Elvira Nabiullina, the governor of the Bank of Russia, indicated in mid-November that CBDCs could be a good choice for governments to replace decentralized cryptocurrencies like Bitcoin.