Indonesia’s central bank, Bank Indonesia, after publishing a consultative white paper on the possibility and intricacies of creating a central bank digital currency (CBDC) for the nation, has called for the public and interested parties to give their input and views on the subject.
A digital rupiah, according to the central bank’s governor Perry Warjiyo, will enhance Indonesia’s push to achieve developed-country status through the digitalization of payments and decentralization of the currency. It would also help manage and deepen the money market to encourage economic and financial inclusion, including with the micro, small and medium enterprises, the Islamic financial economy, and the growing green economy.
The white paper, entitled Project Garuda: Wholesale Digital Rupiah Cash Ledger, published late last year, is seen as an initial presentation of the project focusing on the immediate state of a digital rupiah design, specifically the wholesale digital rupiah cash ledger.
The potential CBDC will be issued in two types – wholesale digital rupiah (w-digital rupiah) and retail digital rupiah (r-digital rupiah). While both will be developed in an integrated manner from wholesale to retail, the w-digital rupiah is the foundation for the entire digital rupiah architecture.
In addition to the publication of the paper as well as meeting “with big players whom we consider capable”, Warjiyo says the bank will issue a proof of concept sometime around July. He adds that the development of the planned CBDC will be done in three stages.
The first stage of development will commence with the issuance of the w-digital rupiah and will include functions and services for issuing, destroying and transferring funds between parties. In the second, the varied functions and services of the w-digital rupiah will be expanded to support transactions in financial markets. And in the third, end-to-end assimilation of the w-digital rupiah with the r-digital rupiah will be tested.
That approach, Warjiyo notes, will allow the examination of several digital rupiah design options to ensure the most optimal added value.
The Indonesian public can provide input or views on the consultative paper and CBDCs in two areas. The first area deals with functionality and covers access, issuance, destruction, fund transfer, technical capability, and aspects involving integration, interconnectivity and interoperability. The second involves general considerations and covers technology, scalability, resilience and implications for payment and financial systems.