Bank Indonesia has issued New Regulations* on foreign exchange transactions, introducing key updates, including the use of smart contracts for derivative transactions. Operating on a digital platform, these smart contacts ensure the terms of the transaction are executed automatically when predefined conditions are met. These contracts, along with their stored or printed versions, are recognised as valid legal evidence.
The New Regulations unifies rules governing the foreign exchange market and Domestic Non-Deliverable Forward transactions into a single framework. It preserves the key provisions from earlier regulations** that apply to these transactions.
The New Regulations require commercial banks using smart contracts to uphold governance, prudential principles, and risk management while ensuring secure, reliable, and cyber-resilient information systems. Banks must also protect data confidentiality, grant Bank Indonesia access to relevant information, and comply with any additional requirements set by the regulator.
In most circumstances, banks are required to consult with Bank Indonesia before using smart contracts. This consultation can be initiated by submitting a digital request letter via email.
*Regulation of the Members of the Board of Governors No. 11 of 2024 on Foreign Exchange Market Transactions.
**Regulation of the Members of the Board of Governors No. 10 of 2022 on the Implementation of Transactions in the Foreign Exchange Market and Regulation of the Members of the Board of Governors No. 11 of 2022 on Domestic Non-Deliverable Forward Transactions.
