The Bank of Indonesia has entered the central bank digital currency competition.

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After outlawing cryptocurrency payments in 2017, Indonesia is now considering allowing payments in a digital rupiah currency.

The Bank of Indonesia is one of the most recent global central banks to announce state digital currency strategies, following a significant increase in the country’s digital payments.

Governor Perry Warjiyo said Tuesday that Indonesia’s central bank is planning to launch a digital rupiah currency as a legal payment instrument in Indonesia, Reuters reports.

According to the official, the rupiah is currently the only legally recognised currency for payment in the world, and BI will look to regulate digital rupiah transactions in the same way as it regulates cash and card-based transactions.

According to Warjiyo, BI is currently researching the future benefits of a digital rupiah, including its effect on monetary policy and payment processes, as well as assessing the financial infrastructure’s readiness. He also said that the bank is evaluating possible technological options for developing a central bank digital currency. The official did not have a precise timetable for the creation of a digital rupiah during a live news conference.

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At the time of publication, BI had not issued an official announcement on its CBDC plans. According to a note on the bank’s official website, BI is about to make a decision on the issuance of a digital rupiah in the immediate future after all appropriate arrangements have been completed. “BI is still focusing on digital transformation as part of the Indonesia payment systems blueprint 2025,” according to the release.

According to the survey, Indonesia’s entry into the global CBDC race is a result of a significant increase in digital banking, with digital transaction volume increasing by more than 60% on an annual basis. Digital payments represent one of the country’s main policy priorities after Indonesia saw strong growth in online transactions during the COVID-19 pandemic.

The latest news comes on the heels of Indonesian financial regulators reporting proposed tax structures for cryptocurrency capital gains last week. Previously, Indonesia’s Commodity Futures Trade Regulatory Agency considered taxing all cryptocurrency trades on domestic crypto exchanges.

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Indonesia is noted for its ambiguous approach to cryptocurrency regulation, having imposed a blanket moratorium on cryptocurrency payments in 2017 while holding crypto trading legal.

 

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