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Indonesia Forges Ahead with Groundbreaking National Payment System

Indonesia Forges Ahead with Groundbreaking National Payment System

In an innovative move that augments its de-dollarization campaign, Indonesia is set to introduce a unique national payment system. This strategic initiative, announced by a top-ranking official at Bank Indonesia, aims to replace Visa and Mastercard within state-owned entities and corporations. The nation eagerly awaits the system’s extensive adoption, projected to transpire shortly.

A Landmark Shift in Financial Infrastructure

Dicky Kartikoyono, who oversees Strategic Management and Governance Department at Bank Indonesia, revealed the plans for this revolutionary payment system. According to him, this scheme will succeed Visa and Mastercard in state-run institutions, indicating a significant transformation in Indonesia’s fiscal system.

Insulating Against Global Financial Turbulence

The launch of Indonesia’s own payment system, considered “extremely timely”, aims to provide a financial “safety net”. This would protect businesses and citizens from increasing financial instability in the West, according to Kartikoyono.

Earlier in the year, Joko Widodo, the Indonesian President, urged regional authorities to support credit cards issued by domestic banks. This step strengthens the nation’s financial autonomy and acts as a safeguard against potential geopolitical consequences.

Learning from Russia’s Mir Payment System

As Indonesia strides toward this ambitious target, it aims to draw from Russia’s experiences with its national payment system, Mir. Dodit Proboyakti, from the Indonesian Credit Cards Association, explained that the new system will leverage insights from Russia’s Mir system, which saw significant success following heavy Western sanctions against Russia post-Ukraine invasion.

Aligning with BRICS’ De-dollarization Approach

Perry Warjiyo, Bank Indonesia’s Governor, emphasized that Indonesia‘s strategy aligns with the de-dollarization approach of the BRICS bloc (Brazil, Russia, India, China, South Africa). This strategy involves diversifying currency use by implementing a local currency system. Warjiyo also mentioned that Indonesia has reached agreements with nations including Thailand, Malaysia, China, and Japan, to enable trade using local currencies.

ASEAN’s Push for Local Currency Use

Indonesia’s initiative coincides with the support for local currency use in economic and financial transactions by nine other Southeast Asian nations, members of the Association of Southeast Asian Nations (ASEAN). This supports their commitment to economic sovereignty.

BRICS Contemplating Common Currency

The BRICS nations are considering introducing a shared currency, a topic set to be discussed at their upcoming leaders’ summit. This idea has sparked extensive debates, with speculation that a BRICS currency could potentially rival the dominance of the U.S. dollar.

The launch of Indonesia’s national payment system marks a bold move towards financial independence. This move, along with the efforts from other Southeast Asian and BRICS nations, could potentially shift global financial dynamics, reshaping international trade and economy.

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