According to the Bank of Indonesia, central bank digital currencies (CBDC) are digital versions of national currency introduced to combat growing crypto adoption.
According to Juda Agung, assistant governor of Bank of Indonesia, the central bank of Indonesia may launch a digital rupeeh to “fight” against cryptocurrency like Bitcoin (BTC), Juda Agung stated at a recent meeting.
“A CBDC could be one tool to combat crypto. We believe that CBDC would be more trustworthy than crypto. According to a Bloomberg report, Agung said that CBDC would be part in an effort to combat the use of crypto for financial transactions.
Official noted that Bitcoin and other cryptocurrencies are traded together with commodity futures, and that they are regulated by the Trade Ministry despite having severe consequences for the financial system.
This news comes just after the National Ulema Council of Indonesia (MUI), Indonesia’s highest Islamic scholarly body, declared cryptocurrencies such as Bitcoin to be haram or prohibited by the Tenets Of Islam. In late October, the East Java branch of MUI issued a statement declaring that the use of cryptocurrency was haram.
As reported previously, the Indonesian government took a mixed position on cryptocurrency regulation. Although cryptocurrency payments were banned in 2017, the local authorities decided to allow cryptocurrency trading. According to reports, the Indonesian Commodity Futures Trading Regulatory Agency (“Bappebti”) announced plans to launch a government-backed cryptocurrency exchange in the second half of 2021.
Although they have maintained a mixed stance regarding crypto, Indonesian regulators are increasingly considering a CBDC. Perry Warjiyo, Governor of the Bank of Indonesia, announced plans to create a digital rupeeh in Indonesia as a legal payment method.
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CBDCs such as the Chinese digital Yuan are believed to have one key feature: they aim to discourage cryptocurrency adoption. CBDCs are not only a tool that can be used to combat crypto, but also Indonesia. Elvira Nabinullina, Bank of Russia governor, stated that CBDCs could be a viable option for governments in order to replace Bitcoin and other decentralized cryptocurrencies.