Crypto can strengthen the global financial system, but it is a catch

Doni Primanto Joewono – Governor of the Bank of Indonesia – argued that cryptocurrencies can provide financial inclusion and benefit the global monetary network. However, the sector will be much more stable if it operates under comprehensive regulations, he added.

Crypto can be risky, but provides certain benefits

During a G20 meeting in Bali, the governor of the Bank of Indonesia said the digital assets industry would be a much safer niche if appropriate rules were applied to it. Otherwise, bitcoin and altcoins will remain risky financial instruments for investors and could harm the macroeconomic environment:

“Crypto-assets can potentially contribute to the emergence of new risks that could affect the stability of the economic, monetary and financial systems.”

Nevertheless, Joewono argued that cryptocurrencies could give individuals access to useful financial products and benefit Indonesia’s monetary network. He reminded that digitalisation had changed people’s lives ever since the COVID-19 pandemic hit the world, and individuals had to reduce their social contacts.

The governor claimed that such digital services will remain a trend even after the end of the coronavirus health disaster, and they will help the future growth of the crypto industry.

In his view, cryptocurrencies have inspired many central banks around the world to explore and liberate a CBDC. China, Nigeria, Japan and many more have already performed several experiments, while Indonesia is also part of that club:

“A number of central banks are continuing to study carefully the possible effects of the CBDC, including Indonesia.”

Indonesians love crypto

The people of Indonesia can benefit significantly if the government decides to open its arms to the cryptocurrency industry since the locals have shown great enthusiasm for the asset class. According to a survey conducted by Gemini, 41% of the locals surveyed are HODLers. This ranked them as the global leader in crypto adoption, and shared first place with Brazil.

Despite not being as high as in other nations, the inflation rate in Indonesia remains worrying. 64% of local crypto owners said they bought bitcoin or altcoins as a hedge against inflation. Most people believe in the long-term potential of their investment, and expect prices to rise in the years to come.

It is worth noting that Indonesia’s crypto – adoption rate is much higher than developed economies such as the United States (20%) and the United Kingdom (18%). In fact, only 16% of US respondents and 15% of UK participants agreed that digital currencies could serve as an appropriate investment tool in times of economic crisis.