• Sat. May 21st, 2022

CBDC Is Tool To Fight Bitcoin, Says Bank Indonesia Executive

Central Bank Digital Currencies (CBDCs), digital versions of national currencies introduced in response to the growing adoption of cryptocurrency, are said to be a critical tool in the fight against crypto, according to the Bank of Indonesia.

Indonesia’s central bank plans to launch a digital rupee to ‘fight’ cryptocurrencies like Bitcoin (BTC), Bank Indonesia Deputy Governor Juda Agung said at a recent parliamentary meeting .

“A CBDC would be one of the tools to fight crypto. We guess people would find the CBDC more believable than crypto. The CBDC would be part of an effort to combat the use of crypto in financial transactions, ”Agung said, according to a Bloomberg report from November 30.

The official noted that cryptocurrencies like Bitcoin are currently traded alongside commodity futures and regulated by the Ministry of Commerce despite severe impacts on the financial system.

The news comes shortly after the National Council of Ulemas (MUI), Indonesia’s largest Islamic academic body, reportedly discovered that cryptocurrencies like Bitcoin were haram, or prohibited, by Islamic principles. The East Java branch of one of the MUIs previously released a statement judging the use of the haram cryptocurrency in late October.

As previously reported, the Indonesian government has taken a mixed stance on crypto regulation. Despite the 2017 ban on cryptocurrency payments, local authorities have chosen to keep cryptocurrency trading legal. In April 2021, the Ministry of Commerce’s Commodity Futures Trade Regulatory Agency of Indonesia (Bappebti) reportedly announced plans to launch a government-backed crypto exchange in the second half of 2021.

While maintaining a mixed stance on crypto, Indonesian regulators are increasingly looking at a potential CBDC. In May, the Governor of the Bank of Indonesia, Perry Warjiyo, announced his intention to launch a digital rupee as a legal payment instrument in Indonesia.

Related: Singapore’s retail-focused CBDC to hedge against private sector-issued stablecoins

CBDCs like the Chinese digital yuan are apparently designed to curb the adoption of cryptocurrency as one of their main features. Indonesia isn’t alone in believing that CBDCs can help governments fight crypto. In mid-November, Bank of Russia Governor Elvira Nabiullina said CBDCs should be a good option for governments to replace decentralized cryptocurrencies like Bitcoin.

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