Even as Indonesia’s central bank, Bank Indonesia (BI) is about to enforce a ban on cryptocurrencies in the near future, it announced plans to launch a digital currency of its own using the same technology that forms the basis of Bitcoin.
BI’s assistant deputy director for bank payment systems, Susiati Dewi, told Kontan last Friday that the central bank is looking to adopt blockchain technology for a potential digital rupiah, trials for which are expected to start this year.
“One day it’s possible that the physical money we issue will be replaced with digital money. But right now, not yet. Nowhere in the world has released [a digital currency by a central bank],” Susi said, as quoted by Kontan.
Blockchain is an online distributed verification system that allows transactions to be processed by the numerous users in any given network, offering protection against fraud or manipulation. While private cryptocurrencies like Bitcoin decentralizes payments using blockchain in that they no longer have to be verified by one single monetary authority, Susi said payments using the digital rupiah would present a safer option as it would also be recognized by central banks around the world.
Furthermore, Susi said the value and distribution of the digital rupiah would be determined by the country’s physical assets and financial condition, therefore making it less susceptible to volatility in value.
Late last year, BI Governor Agus Martowardojo said that, in their bid to protect the rupiah as the legal tender in the country, the central bank would ban Bitcoin and all forms of cryptocurrency sometime in 2018, which includes prohibiting any party from facilitating their transactions.
Agus also said that cryptocurrencies could potentially be used for money laundering and even funding terrorism.
That said, Bitcoin remains popular in Indonesia, where it was estimated in 2015 that there are US$30,000 to US$50,000 worth of Bitcoin transactions taking place each day, as reported by TechInAsia.
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