KUALA LUMPUR (Jan 15): Prominent economist Jomo Kwame Sundaram is of the view that the regulation of digital currencies will not be an easy feat as the valuation is highly dependent on perception on the financial asset.
"Bitcoin is not easy to regulate, because of the very nature of it," he said, stressing that the public has a "very superficial" understanding of digital currencies.
"Everybody talks about how block chain technology allows you so much transparency, but what transparency specifically? It is about confidence. If you have confidence in something, the price goes up. Once you doubt, the price goes down. There are no fundamentals involved," Jomo told reporters on the sidelines of a World Bank Group conference on globalization.
According to him, there is need for detailed explanation on what cryptocurrencies are about.
"There are a lot of myths on cryptocurrencies and about block chain technology. People have very superficial understanding, it is not helpful," he said.
"Having superficial comments on it is not very useful. That's why it is important to get a deeper understanding," he added.
Jomo also noted that as the world gets more complex, the global economic environment is poised to be challenging as well.
"I think we have a very challenging world environment. People have to realise that the world has changed dramatically. They have to prepare for some difficult times.
"This is just the beginning, we don't know how long or how deep it would be. We just don't know, it could be just a passing rain," he said.
"The economy is not as predictable like some people said. I am not saying that things are going to get bad, but we are a very open economy, and we have a very challenging world out there," he added.