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Indonesia’s Central Bank called CBDC a tool to combat crypto

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Bank Indonesia considers the launch of the central bank digital currency (CBDC) as one of the measures to combat cryptocurrencies in the country. Bloomberg writes about this.

During a speech in parliament, assistant governor of the Central Bank Juda Agung noted the “significant impact”; that crypto assets have on the financial system. In his opinion, the digital rupiah will solve this issue.

“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,” Agung stressed.

The religious authority’s condemnation of crypto

Previously, the National Ulema Council of Indonesia (MUI) considered digital assets haram. Thus, MUI’s Fatwa Commission head, Asrorun Niam Sholeh, reiterated the religious authority’s condemnation of cryptocurrency. Citing “uncertainty, wagering, and injury” as reasons.

For the MIU to sanction crypto trading, cryptocurrencies like Bitcoin must fulfill Shariah principles as a commodity or a digital asset. Also, provide a “concrete advantage”, according to Sholeh, who spoke after an expert MIU session.

The MIU discussed Bitcoin as part of the Ulama Fatwa Commission. Which aims to use Islamic law to address some of Indonesia’s most pressing social, political, economic, and legal challenges. In late October, the MIU’s East Java chapter issued a fatwa, which is a “formal judgment or explanation on a matter of Islamic law presented by a certified legal expert,” pronouncing Bitcoin use haram.

Cryptocurrency is not a legal payment instrument

For the first time, the Bank of Indonesia announced plans to issue CBDC back in 2018. Later in May 2021, the regulator confirmed its intention, without specifying the launch dates.

Following a study conducted by Jump Capital in 2020, Indonesia has become one of the most promising countries for cryptocurrencies.

Recall that in June, the regulator banned controlled institutions from using Bitcoin and other digital assets as a means of payment or other financial services instruments. “Cryptocurrency is not a legal payment instrument under the Constitution, Indonesia Banking Law and Currency Law”. Perry Warjiyo, the governor of Bank Indonesia said.

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