The Digital Rupiah Dilemma: Sharia Legal Certainty and Islamic Banking Stability in Indonesia through Juridical-Normative and VECM Approaches
DOI:
https://doi.org/10.21111/al-iktisab.v10i2.24Keywords:
Digital Rupiah , Sharia Legal Certainty , Islamic Banking Stability , Juridical-Normative, VECM ApproachesAbstract
Bank Indonesia's Project Garuda raises a critical legal-economic dilemma for Islamic banking: while the Digital Rupiah enhances payment efficiency, it risks inducing deposit disintermediation and raises questions regarding its Sharia compliance. This study evaluates the legal certainty of the Digital Rupiah and its empirical impact on Islamic banking stability in Indonesia. A juridical-normative analysis of the Currency Law, the P2SK Law, the Indonesian Ulema Council fatwa on crypto assets, and the DSN-MUI fatwa on electronic money clearly distinguishes the sovereign digital currency from speculative crypto assets. Empirically, a Vector Error Correction Model (VECM) was estimated using monthly time-series data from January 2019 to January 2026 sourced from the Financial Services Authority, Bank Indonesia, and Statistics Indonesia. Islamic banking stability was measured via the Z-Score, with digital transaction volume as the primary explanatory variable alongside the BI-7 Day Reverse Repo Rate and Consumer Price Index as controls. Econometric tests confirmed all series were stationary at first difference, and Johansen cointegration identified one long-run equilibrium relationship. Empirical results indicate a negative long-run impact of digital transactions on bank stability (−0.42), while impulse responses reveal an initial instability phase before adjusting toward a new equilibrium. Variance decomposition shows digital transactions explain 18.5 percent of stability fluctuations. Juridically, the Digital Rupiah qualifies as nuqud syar'iyyah as it is state-guaranteed, official legal tender, and free from gharar, directly fulfilling hifz al-mal. Thus, the Digital Rupiah acts as a double-edged instrument whose effective governance requires integrating Sharia-compliant digital mudharabah frameworks and holding limits co-formulated by Bank Indonesia and DSN-MUI.
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