Earlier in May, Indonesia’s central bank had announced plans to launch a digital currency. Now, the central bank is pushing for a digital form of the rupiah to ‘fight’ private cryptocurrencies, reported Bloomberg.
CBDCs vs private cr yptos
Juda Agung, assistant governor at the central bank, noted in the Indonesian Parliament,
“A CBDC would be one of the tools to fight crypto.”
He also added that the assumption is that people would find CBDCs more credible than crypto, stating,
“CBDC would be part of an effort to address the use of crypto in financial transactions.”
The senior bank official also reiterated that crypto assets come under the trade ministry even when it has a significant impact on the country’s financial system. We can recall that the Indonesia Central Bank had banned transactions and payments carried out through cryptocurrencies earlier in June. And even now, the country’s top leaders have continued to tighten the regulations around it.
Recently, Indonesia’s council of religious leaders eventually ended up prohibiting crypto for Muslims. A decision that was announced by the National Ulema Council (MUI) and was considered to be in line with the Shariah law.
Where other countries join in…
But, Indonesia isn’t alone in being wary of private crypto. China, for example, ended by banning Bitcoin and other digital assets earlier in September. But, on the other hand, it is a front runner in the CBDC race. As per reports, China’s eCNY, or digital yuan project is in the advanced pilot stage, with a full-fledged rollout expected by February 2022.
Even the Indian central bank submitted a proposal for a digital rupee recently, as the RBI maintains a cautious stance on private cryptos. Former finance secretary of India, Subhash Garg also agreed that CBDC is an answer to many of the concerns around the asset class. He told the local media recently,
“Private players should not be allowed to issue currencies. If you allow one private entity to issue currencies, another can come up with more number of currencies or any other currency and it will create a problem.”
With that, even Zimbabwe is making progress on the CBDC front rather than adopting Bitcoin or other crypto assets as legal tender. Additionally, the European Central Bank ‘digital euro’ initiative is also underway.
In a recent blog post, McKinsey & Company had stated,
“Many see the current development of CBDCs as a response to the challenge private-sector stablecoins could pose to central bank prerogatives.”