CBDC with Stablecoin Mechanics: Indonesia’s Digital Rupiah to Be Backed by Government Bonds

Core Insights - Bank Indonesia (BI) is advancing its central bank digital currency (CBDC) project, integrating stablecoin mechanics to create a digital rupiah backed by government bonds [1][2] - The digital rupiah will be supported by tokenized government bonds, known as Surat Berharga Negara (SBN), enhancing its stability [2][3] - This initiative is part of Project Garuda, aimed at financial digitalization and innovation in Indonesia [1][4] Group 1 - The digital rupiah will combine the security of a central bank-issued currency with the stability of asset-backed tokens, described as a "national stablecoin" [3] - The model ties the value of the digital rupiah directly to government bonds through tokenization, ensuring stability [3] - The new framework aligns with BI's broader digital finance agenda, focusing on innovation, industrial structure, and financial stability [4] Group 2 - BI will tokenize government bonds to issue digital securities, enhancing market liquidity and reducing transaction costs through blockchain automation [5] - The hybrid CBDC will provide advantages such as greater monetary policy control, improved payment efficiency, and enhanced security [6] - Unlike private stablecoins, the digital rupiah will be a direct liability of the central bank, reinforcing public trust and enabling faster, cheaper payments [7]