Indonesia Central Bank Plans To Use CBDC To Fight Cryptocurrency

Fighting Crypto With CBDC

According to Bloomberg on Tuesday (Nov. 30, 2021), the assistant governor of the Indonesia central bank Juda Agung, made the statement during a parliamentary hearing. According to Agung:

“A CBDC would be one of the tools to fight crypto. We assume that people would find CBDC more credible than crypto. CBDC would be part of an effort to address the use of crypto in financial transactions.”

Indonesia’s central bank first announced intentions to develop a digital version of its currency, the rupiah, back in May. While the BI Governor Perry Warjiyodid not say exactly when the central bank will launch a CBDC, Warjiyo said:

“BI plans in the future to issue a central bank digital currency, digital rupiah…as a legal digital payment instrument in Indonesia.”

With the BI Governor adding,

“We’re also, of course, considering our options on the technology that we will use.”

More central banks across the globe continue to show interest in developing a CBDC, amid the rising popularity of bitcoin and other crypto assets. Countries like China, Japan, South Korea, Ghana, Vietnam, the United Kingdom, among many others, are at different stages of their digital currency projects.

Most governments and regulatory bodies have expressed concern about the emerging technology, stating that the anonymity and volatility associated with cryptocurrencies pose a risk to the economic financial market.

The Bank Indonesia official also noted that cryptocurrency was being traded alongside commodity futures and regulated by the country’s trade ministry, despite the massive impact on the financial system.

Indonesia’s Attitude Towards Crypto

Meanwhile, Agung’s statement comes shortly after the National Ulema Council (MUI), the top Islamic scholar body in Indonesia, said earlier in November that crypto trading is forbidden for Muslims in the country. According to reports, Head of Religious Decrees, Asrorun Niam Soleh, said that the decision to classify crypto as haram was because it had elements of”uncertainty, wagering, and harm.”

While the decree did not automatically mean that cryptocurrency trading was prohibited in Indonesia, it could, however, discourage Muslims from engaging in crypto. Indonesia is regarded as the “most populous Muslim-majority country.”

The Asian country continues to adopt a cautious approach towards cryptocurrency. Back in 2018, the central bank banned crypto-based transactions but later allowed citizens to trade crypto as a commodity.

In May 2021, there were reports that authorities were considering imposing a tax on gains from bitcoin and crypto trading. While the tax policy is yet to take place, an Indonesian tax official said:

”It is important to know that… if there is a profit or capital gain generated from a transaction, the profit is an object of income tax. So the taxpayer who receives capital gain has to pay the tax and report it.”

South Korea is also preparing to impose a 20% tax on crypto gains in January 2022, but lawmakers in the country are looking to delay the taxation till January 2023.

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