Bank Indonesia's Central Bank Digital Currency Consultative Paper, Personal Feedback

The Consultative Paper on the Digital Rupiah by Bank Indonesia outlines the development and implementation of a digital currency within the country. However, this proposal raises several significant concerns related to individual freedom and the potential for government overreach, which beat the purpose of the blockchain tenet in the first place. 

Here are some key points highlighting these issues:

1.⁠ ⁠Centralized Control and Surveillance:

• The design of the Digital Rupiah includes Bank Indonesia as the genesis developer, validating node, regulatory node, operator node, and administrative node. 
• This centralizes a vast amount of power within the central bank, giving it extensive control over the digital currency system. 
• This could lead to potential surveillance and monitoring of all transactions, compromising the privacy of individuals and businesses.

2.⁠ ⁠Restricted Access and Participation:

•  Access to the wholesale Digital Rupiah (w-Digital Rupiah) is limited to certain designated parties (commercial banks and non-banks) based on criteria set by Bank Indonesia. 
• This exclusionary approach can prevent broader participation and limit financial inclusivity, impacting individuals and smaller entities that might not meet the criteria.OJK already launched Laku Pandai (Financial Inclusion) program back in 2009 and this new initiative somewhat opposing the fundamental objectives.

3.⁠ ⁠Real-Time Data Collection and Analysis:

• Bank Indonesia, as the regulatory node, has the right to collect and analyze transaction data in real-time. 
• This continuous monitoring capability poses significant risks to individual financial privacy and could be perceived as an intrusion into personal financial affairs. Data sovereignty is fundamentally the reason why blockchain technology was invented.

4.⁠ ⁠One-Tier Distribution Scheme:

•  Both wholesalers and non-wholesalers can obtain Digital Rupiah directly from Bank Indonesia, but only wholesalers can distribute it to retailers and end-users in the end state.
• This hierarchical structure can create dependencies and power imbalances within the financial system.

5.⁠ ⁠Lack of Interest on Digital Rupiah:

• The w-Digital Rupiah is designed to bear no interest, which can deter individuals from holding it as a savings instrument. 
• This characteristic could disadvantage those who rely on interest-bearing assets for wealth accumulation, further centralizing financial benefits towards established financial institutions.

6.⁠ ⁠Technical and Operational Risks:

• The use of Distributed Ledger Technology (DLT) introduces operational and cyber risks. Although DLT is intended to mitigate single points of failure, it also presents challenges in terms of scalability, efficiency, and data recovery, potentially affecting the resilience of the financial system. Disaster recovery plan need to be establish comprehensively to mitigate business operation risk.

7.⁠ ⁠Potential for Government Overreach:

• The comprehensive control exercised by Bank Indonesia over the Digital Rupiah ecosystem can be seen as government overreach. 
• This centralized authority can potentially lead to the misuse of power, such as freezing assets, controlling spending behaviors, and enforcing monetary policies that may not align with individual freedoms and economic activities.

In summary, while the development of a Digital Rupiah aims to modernize Indonesia's financial system, the proposed framework presents substantial risks to individual freedom, privacy, and ownership of money. The centralization of power, extensive surveillance capabilities, and restricted access to the digital currency system are significant concerns that need to be addressed to ensure the protection of individual rights and the prevention of government overreach.