Bank of Indonesia: Crypto Could Strengthen the Global Financial System but There’s a Catch

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

Crypto Might be Risky but Provides Certain Benefits

During a G20 meeting in Bali, the Bank of Indonesia’s Governor opined that the digital asset industry will be a much safer niche if appropriate rules are applied to it. Otherwise, bitcoin and the altcoins would remain risky financial instruments for investors and could harm the macroeconomic environment:

“Crypto-assets can potentially help emerge new risks that could affect economic, monetary, and financial system stability.”

Nonetheless, Joewono maintained that cryptocurrencies could provide individuals access to useful financial products and benefit Indonesia’s monetary network. He reminded that digitization had transformed people’s lives ever since the COVID-19 pandemic hit the world, and individuals had to reduce their social contacts.

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

In his view, cryptocurrencies have inspired numerous central banks across the globe to explore and release a CBDC. China, Nigeria, Japan, and many more have already conducted several experiments, while Indonesia is also part of that club:

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

Indonesians Love Crypto

The population of Indonesia could significantly benefit if the government decides to open its arms to the cryptocurrency industry since locals have displayed huge enthusiasm toward the asset class. According to a survey conducted by Gemini, 41% of the questioned locals are HODLers. This ranked them as the global leader in crypto adoption, sharing the first spot with Brazil.

Despite not being as high as in other nations, the inflation rate in Indonesia is still concerning. 64% of the local crypto owners said they bought bitcoin or altcoins as a hedge against inflation. Most believe in the long-term potential of their investment, expecting the prices to surge in the years to come.

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