Central banks are considering their own digital currencies
A battle seems to be brewing in the crypto arena – a battle that pits central banks against the bitcoin (and other cryptocurrencies) of the world.
The latest illustration comes from reports that Indonesia’s central bank is considering using central bank digital currencies (CBDCs) as a way to ‘fight’ cryptocurrencies.
According to Bloomberg reports, Juda Agung, deputy governor at the central bank, said in comments to parliament that a digital rupee could be used in this way: “A CBDC would be one of the tools to fight crypto. We guess people would find the CBDC more believable than crypto. The CBDC is reportedly part of an effort to combat the use of crypto in financial transactions. “
There are at least other signs that bitcoin and other digital coins are being hampered a bit in Indonesia. As Bloomberg noted, the National Ulema Council said that in general cryptocurrencies are considered “haram” or are prohibited, in part due to the “betting” aspects of the cryptos themselves. The ban would have the impact of limiting the attractiveness of bitcoin and other cryptos to a significant portion of the population, as the vast majority of Indonesia’s population is Muslim – and therefore, presumably, would take note of the Council’s ban. .
At the same time, the crypto has found some favor in Indonesia, where the government has estimated that as many as 7.4 million Indonesians hold crypto from data counted in July, worth around 33. billion dollars – and the number of investors has doubled in a year. .
The statements from Indonesia follow concrete actions by countries like China, where the groundwork is definitely being laid to launch a nationwide CBDC, amid a crackdown on private cryptocurrencies.
In September, China announced through its central bank that all cryptocurrency-related transactions, including bitcoin, were illegal.
Also Read: Global Crypto Ban In China Paves The Way For CBDCs
This ban is more sweeping, but builds on other crackdowns in the country on crypto, such as the May 2021 announcement that banking regulators are banning financial institutions (FIs), including banks and payment companies, to provide cryptocurrency-related services.
These efforts allow the People’s Bank of China to fill the questionable void created by the ban with its digital yuan. In this way, China is creating a situation that echoes Agung’s comments that people find the CBDC more “credible” than cryptocurrencies.
India is emerging as another large market that appears to be on track to bring digital currency onto the national stage, at the expense of cryptocurrencies. This government is on track to introduce a bill in the next winter session of Parliament that paves the way for the issuance of CBDCs, presumably to the detriment of private cryptos.
The bill would be titled The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. The guidelines in this legislation would seek to create a framework for digital currency while banning cryptos – with the notable exception of cryptos which help promote blockchain. .
Cars spin as central banks target cryptos, with CBDCs like an arrow in the quiver.
Read more: India’s impending crypto ban could limit Bitcoin to emerging and volatile economies