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Globalization dying down in face of digitization: BI governor
The BI governor says the most obvious indicator that globalization has decreased is the more frequent digitalization in economics and finance,.
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Bank Indonesia governor Perry Warjiyo waves to journalists after a media briefing at his office in Jakarta in this file picture. (Antara/Muhammad Adimaja)
T
he latest economic challenge in today’s era is the dying down of globalization as evidenced in more inward sentiment in trade and the increased use of digital tools in economics and finance, Bank Indonesia (BI) governor Perry Warjiyo says.
“Pushing forward with more innovation in the digital era is needed. However, digital innovation should be balanced with national economic stability,” Perry said in a speech in front of hundreds of researchers and scholars from 16 countries at the Bulletin of Monetary Economics and Banking (BEMB) International Conference and Call for Papers in Kuta, Bali, on Thursday.
Perry said the world faced the dying down of globalization and the rise of digitalization. More countries are increasingly inclined to prioritize domestic economic potential in response to tensions in international trade, he added.
“Trade tension between the US and China indicates a decrease in globalization,” said Perry, who has a PhD in international monetary and economics and is also the chairman of the Indonesian Economists Association (ISEI) and the Gadjah Mada University Alumni (Kagama).
More volatile capital flow between countries and currency exchange rates also indicate less trust in globalization, he added, meaning that the central bank could not rely only on its interest rate policy or maintaining inflation when facing such challenges.
“The most obvious indicator that globalization has decreased is the more frequent digitalization in economics and finance,” Perry said, urging policymakers to understand the shift in economic thinking to better respond to the changing trend in economics.
Perry emphasized that at least three things needed to be taken into account by central banks and policymakers to respond to the situation, namely policy mix, stronger synergy and coordination between all stakeholders, as well as integrating economic aspects with financial digitization.
