The State Bank of Vietnam is reportedly set to become the latest central bank to delve into explorations of the feasibility and operationally of central bank digital currencies (CBDCs).\u00a0<\/p>\n
Its brief, distinct from some other countries, is to trial a digital currency that would expressly be built on blockchain technology, rather than a centralized protocol.<\/p>\n
According to aJuly 3\u00a0report from the English-language daily Viet Nam News,\u00a0Prime Minister Ph\u1ea1m Minh Ch\u00ednh announced the initiative as part of his wider e-government development strategy. The central bank is expected to work on the development and implementation of the pilot from 2021\u20132023.<\/p>\n
Vietnamese politicians’ embrace of blockchain technologies in principle remains distinct from their broad hostility to the decentralized currencies that have popularized the underlying protocols. The country banned Bitcoin (BTC) as a means of payment in 2018, while retaining individuals’ and enterprises’ rights to privately invest in crypto.<\/p>\n
The ban was soon followed by a directive to credit institutions to restrict services provided to digital currency-related activities in order to mitigate money laundering risks. Despite both moves, there has not been a formal regulatory framework in place for crypto exchanges operating in the country.<\/p>\n
Since spring 2020, this hostile but relatively off-hands approach has begun to shift. In May of that year, Vietnam’s\u00a0Ministry of Finance agreed to establish a research group charged with studying and making policy proposals regarding cryptocurrencies and digital assets. That group, which includes the State Bank, also includes the country\u2019s securities regulator, the Department of Banking and Financial Institutions, the General Department of Vietnam Customs and others.<\/p>\n
Hu\u1ef3nh Ph\u01b0\u1edbc Ngh\u0129a, deputy director of the Institute of Innovation at the University of Economics Ho Chi Minh City (UEH), told reporters that as cashless payments continue to increase in the country, recognition of digital currencies by the State Bank would help to further accelerate this process. In\u00a0Ngh\u0129a’s view, \u201cdigital money is an inevitable trend\u201d and conducting the pilot will help the government to assess the pros and cons of various approaches and to explore appropriate management mechanisms.<\/p>\n
Related: Vietnam\u2019s ministry of education to record certifications on blockchain<\/em><\/strong><\/p>\n Another interviewee,\u00a0L\u00ea \u0110\u1ea1t Ch\u00ed, who is deputy head of UEH\u2019s Finance Faculty, stressed that acting fast would be necessary for the country to be competitive as momentum behind CBDCs continues to grow.\u00a0<\/p>\n \u00a0Viet Nam News contends that CBDC issuance could be useful for smaller countries in a global system dominated by the United States dollar, and, to a lesser extent, the euro and yen. Ch\u00ed however, in addition to calling for an acceleration of CBDC study and development, stressed the potential risks for the country’s financial and monetary security. A representative from NextTech Group \u2014 a group of companies focused on digitized commerce across South East Asia\u2014 argued that it is necessary for Vietnam to determine an official definition for cryptocurrency.<\/p>\n Prior to the government setting up its research group in May 2020, Vietnamese police officials\u00a0urged citizens not to participate in crypto investment schemes. This March,\u00a0Vietnam’s Ministry of Finance itself warned the public about the risks of cryptocurrency investment, given the industry’s still-unregulated status in the country.<\/p>\n