Indonesia’s central banking regulator Bank Indonesia has announced the start of a consultation process for its central bank digital currency (CBDC) initiative known as Project Garuda.
A report from local news publication Tempo disclosed that Bank Indonesia’s consultative process is designed to seek the opinion of industry stakeholders ahead of a full-scale launch for the CBDC. The central bank confirmed that the public consultation process would be focused only on a whole CBDC, with plans for a retail version in the works.
“We have published a consultative paper and met with big players whom we consider capable, and inshallah, we will issue a proof of concept around July,” Bank Indonesia Governor Perry Warjiyo said. “We will also push for the downstream project of the government and several other policies.”
The consultation of stakeholders is the first step in Indonesia’s plan to launch a wholesale CBDC which Warjiyo says will be vital to making the country a leader in digitalization. Warjiyo added that CBDCs would promote financial inclusion and deepen the money market while being environmentally friendly because of distributed ledger technology (DLT).
“Digital Rupiah is BI’s contribution to the country in a bid to maintain rupiah sovereignty in the digital era,” a quote from the central bank’s website said.
Project Garuda’s white paper notes that the wholesale CBDC will not be entirely limited to commercial banks and that the central bank will designate which entities will be wholesalers. Wholesalers will be given the authority to distribute the future retail digital rupiah, with the central bank overseeing all the wholesale transactions.
Project Garuda’s second phase will explore CBDC usage in the tokenization and settlement of securities transactions. Pundits speculate that Bank Indonesia’s retail CBDC will not be built on DLT following the scalability issues plaguing distributed ledgers.
A gale of activities around CBDCs
During the last month, central banks worldwide have taken an active stance in developing their CBDCs. The People’s Bank of China (PBoC) is leading the way with a series of innovations designed to increase the adoption rates of the digital yuan.
In the last 30 days, Chinese municipal governments have given away nearly $20 million in digital yuan subsidies to drive growth. The digital yuan has been deployed in trading securities while top members of the Chinese Communist Party (CCP) have issued new milestones to local authorities regarding transaction volumes in the next 12 months.
Thailand, The Philippines, and Hong Kong also notched significant progress with their CBDC development since the start of the year.
