Indonesia’s central bank has declared that it would further its efforts to build a central bank digital currency (CBDC) by releasing a white paper outlining the plans for the introduction of the digital rupiah.
The CBDC effort, codenamed Project Garuda, is intended to “protect the sovereignty of the Rupiah in the digital age,” according to the central bank. According to the white paper, Project Garuda would be issued in three stages, with a wholesale CBDC being the main objective of Bank Indonesia (BI).
A wholesale CBDC is involved in settling interbank transfers and transactions involving central bank reserves. Proponents of wholesale CBDCs have cited their ability to increase payment and securities settlement efficiency as one of the reasons for their growth.
The whitepaper provided insight into the digital rupiah design’s end-to-end integrated design configuration, technological architecture, and regulatory and policy issues. According to the central bank, the CBDC would supplement current banknotes and coins by developing “national financial systems and the integration of national digital economy and finance.”
As stated in the white paper, each development step will start with public consultations comprised of focus group discussions and consultative papers. After public discussions, technical experimentation will begin, including proof of concept, prototype, and pilot. A policy position assessment will follow each successful step to assess the legislative framework in Indonesia.