Bank of Indonesia (BI) is currently refining its efforts to issue a Central Bank Digital Currency (CBDC), known as the Digital Rupiah. This initiative reflects BI’s commitment to integrating digital technology into the payment system. However, progress on issuing the Digital Rupiah appears to have stalled. Since introducing its roadmap, named Project Garuda, BI has yet to move beyond the proof-of-concept stage or conduct a pilot program.
The slow pace of development raises questions, especially considering that Project Garuda was launched in 2022, which was not included in Indonesia’s 2019-2025 Payment System Blueprint. The initiative originally emerged in response to BI’s growing concerns over the rapid expansion of cryptocurrencies. Like many central banks worldwide, BI saw the rise of decentralized cryptocurrencies—operating outside the formal financial system—as a potential threat to monetary policy transmission and financial stability. The introduction of the Digital Rupiah was expected to counterbalance the influence of cryptocurrencies and safeguard the financial system.
However, this sense of urgency has since diminished due to two key factors. First, BI has already prohibited the use of cryptocurrencies as a legal payment instrument in Indonesia, restricting their role to investment assets. As a result, cryptocurrencies no longer pose a direct threat to the country’s monetary system. Second, the high volatility of crypto assets has reduced their appeal, confining demand primarily to high-risk investors.
Despite the reduced risk from cryptocurrencies, BI should not delay the issuance of the Digital Rupiah. Beyond countering crypto-driven instability, a CBDC offers broader economic benefits, particularly in enhancing cross-border transaction efficiency and deepening financial inclusion.