Indonesia’s former finance minister has said that the country’s central bank should issue digital currency as an official payment method to monitor its circulation.
Last month, Bank Indonesia (BI) issued fresh warnings about the risks involved with trading in cryptocurrencies such as bitcoin, arguing that they could present a potential threat to the financial system. As a result, the bank said that it didn’t recognise digital currencies as a legal medium of exchange, according to a press release. In December, the central bank issued a new regulation banning the use of cryptocurrencies by financial institutions.
Now, though, according to Chatib Basri, Indonesia’s former finance minister, he explained that the banning of the circulation of cryptocurrencies such as bitcoin and ethereum wasn’t an effective solution, reports Kompas.com.
“BI needs to create something that can be monitored,” he said. “I am aware of BI’s concerns about bitcoin … but we can’t ban it.”
Despite initial interest from central banks around the world who have conducted research into issuing their own digital currency, no central bank has implemented one yet.
In 2015, the Bank of England (BoE) first raised the possibility of a central bank-issued cryptocurrency in its research agenda. However, at the start of 2018, the BoE stated that it does not ‘currently plan to issue a central bank-issued digital currency.’ It does intend to continue researching the topic. The Bank of Canada has also been weighing the merits of establishing a cryptocurrency, but that’s as far as it goes at present.
Singapore’s central bank, the Monetary Authority of Singapore (MAS), has been conducting trials in its own digital currency and the blockchain, and plans to complete it next year. It will then decide whether to commercialise the trial.
However, while trials are ongoing around the world, for now it doesn’t seem likely that Indonesia will change it stance regarding the use of cryptocurrencies. As a result, it joins a growing list of naysayers who are against the market.
India’s finance minister Arun Jaitley recently said in his budget speech that the government doesn’t consider digital currencies as legal tender, adding that:
“[The government] will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.”
Since peaking at nearly $20,000 at the end of December, bitcoin has seen its value drop significantly amid regulatory pressure and a clampdown from countries such as China and South Korea. At the time of publishing, bitcoin is trading at $6,518, representing a 40 percent drop over the past seven days, according to CoinMarketCap.