Bank Indonesia Aims to Fight Bitcoin with Its CBDC (Report)

The central bank of Indonesia is willing to issue a digital form of its national currency as a way to “fight” private digital assets. The financial institution believes a CBDC would be more “credible” than bitcoin or the altcoins.

Indonesia and its CBDC Efforts

Bank Indonesia (BI) – the country’s central bank – displayed its intentions to launch a central bank digital currency (CBDC) earlier this year. In May, Governor Perry Warjiyo asserted that it is on its way without revealing a specific launch date.

Back then, BI noted that during the COVID-19 pandemic, locals have switched from cash to digital payments. As such, a CBDC monitored and controlled by the authorities would be the best option for that monetary transition, the institution opined.

According to a recent coverage by Bloomberg, Bank Indonesia now has another reason to issue a digital rupiah: to “fight” cryptocurrencies which cause a significant impact on the nation’s financial network. Juda Agung – an Assistant Governor at the bank – added that a CBDC is a more reliable option than bitcoin, ether, and the rest of the private digital assets:

“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.”

In the meantime, the Indonesian government intends to create a dedicated digital asset exchange by the end of 2021 since the country has more than 7 million crypto investors, while transaction value has surpassed $30 billion. In comparison, nearly twice fewer locals invested in the space in 2020.

Crypto Is ‘Haram’ In Indonesia

A few weeks ago, the National Ulema Council (MUI) – Indonesia’s top Islamic scholar’s body – showed a highly negative stance on cryptocurrencies by declaring all operations in the industry as “haram,” or forbidden.

Asrorun Niam Soleh stated that the rejection ignites from the thesis that bitcoin and the alternative coins are riddled with “uncertainty, wagering, and harm.” Nonetheless, the MUI’s Fatwa Commission Chairman explained that digital assets can be traded as a commodity if it obeys the Shariah law and shows a “clear benefit.”

With a population of more than 273 million, Indonesia is known as the most populated Muslim-majority nation. Having that said, the development may have a significant effect on the local cryptocurrency ecosystem.