Central Bank Digital Currency (CBDC) in Islamic Banking Perspective: An Alternative Economic Development in ASEAN Countries

Abstract

As global economies pivot toward digitisation, Central Bank Digital Currency (CBDC) emerges as a transformative innovation, promising to reshape financial systems worldwide. This paper explores the potential of CBDC within the framework of Islamic banking, examining its viability as an alternative economic development tool in ASEAN countries. By aligning the principles of CBDC with shariah-compliant financial systems, the study investigates how this digital currency can address regional economic disparities, promote financial inclusion, and strengthen monetary policy effectiveness. By undergoing qualitative approach and employing a multidimensional analysis, the research delves into key areas such as transparency, risk-sharing mechanisms, and ethical governance inherent in Islamic finance, contrasting them with conventional CBDC implementations. It evaluates how ASEAN countries can leverage CBDC to support sustainable growth while adhering to Islamic values. Critical questions include: How can CBDC enhance economic resilience within shariah frameworks? What are the socio-economic implications of CBDC adoption in predominantly Islamic economies? Findings reveal that integrating CBDC with Islamic banking principles offers significant potential to reduce transaction costs, enhance trust, and improve financial access for underbanked populations. However, challenges such as regulatory harmonisation, technological infrastructure, and ensuring shariah compliance remain substantial. The study emphasises the need for collaborative efforts among central banks, fintech innovators, and Islamic scholars to create robust frameworks for CBDC deployment. Recommendations include fostering intergovernmental cooperation, investing in inclusive digital infrastructures, and embedding Islamic ethical standards in CBDC design. This paper contributes to the growing discourse on digital currencies and Islamic banking, offering actionable insights for policymakers and stakeholders in ASEAN's economic development.