- Indonesia’s Central Bank Wants to ‘Fight’ Crypto With CBDC
- According to Juda Agung, despite having a significant impact on the financial system, crypto-assets are traded alongside commodity futures and regulated by the trade ministry.
Indonesia is considering developing a central bank digital currency (CBDC) to counter the use of cryptocurrency in the country. A senior official said that Indonesia’s central bank wants a digital form of the rupiah to “fight” cryptocurrencies as it considers whether to issue such a tender.
According to Juda Agung, an assistant governor at the central bank, despite having a significant impact on the financial system, crypto-assets are traded alongside commodity futures and regulated by the trade ministry. On Tuesday, Agung said that
“A CBDC would be one of the tools to fight crypto. We assume that people would find CBDC more credible than crypto. CBDC would be part of an effort to address the use of crypto in financial transactions.”
Bank Indonesia has been considering a central bank digital currency, or CBDC, since the start of this year. However, the central bank’s aversion to crypto-assets may complicate the situation for millions of Indonesians who invest in them. The National Ulema Council declared cryptocurrency haram or forbidden because it contains uncertainty, gambling, and harmful elements. The council is the final authority on Shariah compliance in the country with the world’s largest Muslim population.
Meanwhile, the government is moving ahead with plans to open a dedicated cryptocurrency exchange as soon as this year. According to the trade ministry, 7.4 million Indonesians were invested in crypto assets as of July, more than doubling from the previous year, with transaction value increasing to 478.5 trillion rupiahs (US$33 billion).
In 2018, Indonesia’s central bank declared the cryptocurrency “not a legitimate instrument of payment.” As a result, the country forbids cryptocurrency for payment, but citizens may trade it as a commodity. Due to the cryptocurrency’s growing popularity during the outbreak, the Indonesian government has considered charging taxes on crypto trading earnings in recent months.