Bankers Respond to Bank Indonesia's Digital Currency Plan

TEMPO.CO, Jakarta - Bank Indonesia (BI) is currently formulating a white paper on the development of a central bank digital currency or CBDC. The central bank’s deputy governor Doni Primanto Joewono eyeing for the white paper to be issued by the end of this year, with the digital currency dubbed the digital rupiah. 

How does this affect the economy and how do bankers respond to this plan? In a discussion regarding digital currency in the Indonesian digital economy festival 2022 at Nusa Dua, Bali, Bank Jago chief executive officer Kharim Indra Gupta Siregar expressed his support for the issuance of a digital currency.

According to Kharim, the payment system in Indonesia has changed in the past couple of years after the introduction of various digital payments and e-money. “The use of physical money continues to dwindle as society is getting used to utilizing digital payments and transactions. Service providers are also growing in number and have arrived with their unique ecosystems.”

The arrival of CBDC, Kharim said, will remodel Indonesia’s payment system. “But as a digital bank that provides a number of digital transaction services, [we] positively welcome [Bank Indonesia’s plan to issue digital currency] and will continue to innovate the services.”

Kharim further explained that BI’s digital currency issuance will benefit the public as a whole as it will help increase the availability and role of a central bank. Digital currency is also useful to support the implementation of monetary policy and financial stability. "For example, the use of digital currency for the distribution of cash assistance or subsidies for the community."

On the other hand, the issuance of digital currencies by central banks will also reduce the risk of the emergence of many privately made digital currencies (which are commonly called stablecoins). For banking circles, the existence of digital currency will also encourage innovation in payment systems to be more efficient and competitive.

Meanwhile, Bank Mandiri chief economist Andri Asmoro said the issuance of digital currency by the central bank is an initiative that deserves support. It echoed Kharim’s positive attitude towards the concept of the presence of CBDC and how it can be a gamechanger for economic activity. "Especially in the cashless ecosystem, transactions will be faster, cheaper, and more practical. The benefits are many, both for businesses to the household level," he said.

The application of digital currency, according to Andri, can be a solution for many countries that are still having difficulty improving people’s access to financial services. 

"The existence of a CBDC is important for a country where many people are still unbanked."

The technology used in the CBDC (digital ledger) will also reduce the risk of losing public funds stored in banks if the bank company collapses. "Ledger technology allows the tracking of people's money movement. It is also safer because it can minimize fraud and other crimes."

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