BI Will Immediately Launch Digital Rupiah Currency, What Does It Look Like?

JAKARTA - In the midst of the vibrant cryptocurrency in the world. Bank Indonesia (BI) revealed its plan to issue a digital Rupiah currency, aka the Central Bank Digital Currency (CBDC).

The Executive Director of the Communication Department of Bank Indonesia said that the issuance of digital rupiahs or CBDCs is to support the digitalization of the economy in Indonesia, including stemming the popularity of cryptocurrencies.

"Depending on the design, there are several designs. For example, if Bank Indonesia issues a CBDC (Central Bank Digital Currency), now it is referred to as base money as banknotes issued by Bank Indonesia which are statistically in digital form," Erwin said as quoted by CNBC Indonesia's podcast, Friday, 26 March.

It should be noted, CBDC is digital money issued and its circulation controlled by the central bank, in this case BI. This digital Rupiah currency is used as a legal means of payment to replace currency.

This concept is a little different from cryptocurrencies like Bitcoin where internet money is generated from mining computer files. Bitcoin is decentralized, there is no need for a central bank and banks in transactions because the transactions take place peer-to-peer from sender to receiver.

There are several CBDC design models for making digital Rupiah money. First, CBDC will accelerate the process of transferring money with easier, more privacy, universal access, and foreign payments (cross-border).

However, printing digital Rupiah currency requires caution. Given that Indonesia consists of hundreds of thousands of islands and not all of them have access to technology and the internet.

"Timing is everything. We are in the stage of seeing everything, later there will be no wrong design, wrong technology, "added Erwin.

Apart from that, the cybersecurity factor needs to be taken into account. Given that all banking systems currently rely heavily on the internet, cyber attacks are vulnerable.

Erwin revealed that digital rupiah currency must be fortified by a multi-layered cybersecurity system. In order to avoid the financial crisis that comes from cyber attacks.

"What is meant by cyber security is not only prevention but also resolution that must be in the design," said Erwin.

So far, China already has Digital Yuan as part of legal financial transactions. "So basically we're adopting CBDC in the current payments blueprint."