On 22 February 2018, Bank Indonesia Institute hosted the last FKP seminar in February 2018 in Jakarta. Iwan Setiawan (Bank Indonesia Institute) presented his study on virtual currency, which he referred to as currency that is not intended for real life use, and digital currency, a payment method in electronic form and is intangible. Digital or virtual currency is basically classified into e-money/e-wallet, and virtual currency itself, where the former is a digital representative of fiat currency (which is regulated), and the latter is unregulated and independent from fiat-currency. The first part of his presentation fully covered the aspects of digital currency and also a deeper material about the virtual currency. He emphasized that the response from governments around the world to virtual currencies vary from criminalization, prohibition in some aspects, permission, and hands off policy.
The second part of the presentation focused on opportunities, challenges, and risks posed by virtual currency. Virtual currency (VC) has proven to be immutable, corruption- and tamper-proof, secure, requires zero downtime, and many other advantages due to its characteristic. It is usable in broader applications compared to fiat currencies, helps connecting fiat currencies across borders with less cost and more speed, it is also considered as tool for financial inclusion, and it may be integrated to global payment system. The challenges that virtual currency poses are that it may give more anonymity in transactions, which linked to a greater challenge in detecting money laundering and other crimes related to virtual currency. It is also raise protection issues form consumer and investors, due to the fact of VC’s potential for fake Initial Coin Offerings (ICO), consumer wallet hack, volatility, and loss of consumer funds. The other important challenge is that VC transaction consumed a sizable energy/electricity.
In the last part of his presentation, Iwan explained current government actions and plans more deeply in respond to the existence of virtual currency. What are the responses of governments, including the Indonesian government? Please refer to the video and slides for the complete presentation.
For the complete presentation and Q&A session, please refer to the videos and materials provided.
