DESIGN ELEMENTS AND RISKS OF CENTRAL BANK DIGITAL CURRENCY IN TAILORING A PRUDENT ‘RUPIAH DIGITAL’

Abstract

As the risks associated with the use of stablecoins grow, BI intends to issue Indonesian CBDCs. However, as a financial system innovation, the design of a CBDC must also consider the consequences and risks that may arise from its implementation. In this regard, BI believes that the primary foundation for CBDC implementation should be a strong legal foundation. This normative paper discusses the legal concerns that could arise throughout CBDC implementation in Indonesia. However, because Indonesia's legal framework for cyber privacy and security is still in its infancy, this paper also investigates the privacy and cyber security risks of CBDC implementation. According to the research findings, Indonesia's regulatory framework is still far from being capable of accommodating CBDC implementation. The legality of this CBDC is primarily determined by whether it is a currency or merely a payment instrument. Furthermore, there are privacy and cybersecurity risks that are not mitigated by the current regulatory framework. Despite the passing of the umbrella regulation for Indonesian personal data protection, some aspects of privacy must be taken into account by enacting provisions that protect retail CBDC users. In terms of cybersecurity, there is an urgent need to enact a comprehensive Cybersecurity Law, given the existing cybersecurity provisions still lack adequate protection for CBDC.