During the holiday period, Bank Indonesia shared the results of its wholesale central bank digital currency (wholesale CBDC) consultation. Now the central bank will progress Project Garuda to a proof of concept.
Last year the central bank published a whitepaper outlining its three-staged CBDC strategy. It plans to start with a basic wholesale CBDC in Phase 1 and progress to integration with a securities ledger for Phase 2. The end game is to launch an integrated retail digital rupiah as part of Phase 3.
According to The Business Times, Bank Indonesia Governor Perry Warjiyo recently stated, “We have issued the proof-of-concept for the digital currency and we expect to design the technology and infrastructure we will be using in the near future.” It’s working with financial institutions for the trial phase.
Bank Indonesia’s CBDC consultation started in February last year. The results reveal an agreement around using a permissioned DLT system with a Proof of Authority consensus mechanism. It’s also interested in using DeFi-style Automated Market-Making (AMM) and Liquidity Management Capabilities.
While the central bank will be responsible for issuing the digital rupiah, banks will operate validator nodes alongside the central bank. Likewise, the central bank will control who can hold a wallet, but industry will manage the wallets.
Nonbank financial institutions are likely to be able to access the system to encourage innovation. However, they won’t have validator nodes, and some won’t have nodes at all.
Meanwhile, several jurisdictions are progressing wholesale CBDC trials, including Brazil, India, Korea, and Singapore. The three application areas are for securities settlement, cross border payments and settling tokenized deposit transactions.
