ISLAMIC CENTRAL BANK DIGITAL CURRENCY (CBDC) DESIGN

We aim to propose central bank digital currency (CBDC) design that aligned with Islamic principles, as well as strengths, weaknesses, opportunities, and threats of its design. An integrative review will be used to construct the CBDC design, while benefits and drawbacks are assessed by SWOT analysis. Our result shows that CBDC design should be both retail and wholesale interlinkages, account and token based payment authentication, hybrid architecture, non-interest bearing remuneration, and managed anonymity. This design is done through integrative review within relevant hadith, Quran verse, and other works of literature, so it could be achieving maslahah and mitigate mudharat. In adding relevancy, fostering digital financial inclusion, better resiliency towards power outage, and mitigating bank disintermediation are the main strengths. However, consequences such as system complexity, underdeveloped legal framework, and high cost of new technology investment should be faced by the central bank. As for external aspects, this study identifies major opportunities such as growing Islamic finance, cashless society, and accelerated network effect. Last but not least, cybercrime, low level of digital financial literacy, and attractive conventional alternatives are substantial threats to CBDC development.