Vietnam’s prime minister, Phm Minh Chnh, has tasked the State Bank with conducting a research and implementation pilot programs for a digital currency in the country.
According to reports, the State Bank of Vietnam is poised to become the next central bank to investigate the feasibility and operational viability of central bank digital currencies (CBDCs).
This is different from the mandates of some other nations in that it seeks to test a digital currency that would be created specifically on blockchain technology, rather than on the basis of a centralized protocol.
According to a storey published on July 3 by the English-language newspaper Viet Nam News, Prime Minister Phm Minh Chnh launched the project as part of a broader plan for the growth of e-government services.
From 2021 to 2023, the central bank is anticipated to devote its efforts to the creation and execution of the pilot.
Vietnamese officials’ acceptance of blockchain technology, in theory, remains different from their widespread opposition to the decentralized currencies that have popularized the underlying protocols. The nation outlawed Bitcoin (BTC) as a method of payment in 2018 but preserving individuals’ and businesses’ rights to privately invest in crypto.
The prohibition was quickly followed by a directive to financial institutions, instructing them to limit the services they offer to digital currency-related operations in order to reduce the danger of money laundering and other criminal activity.
Despite these measures, there has not been a clear regulatory framework in place for crypto exchanges functioning in the nation.
Since the spring of 2020, there has been a noticeable change in this aggressive yet rather nonchalant attitude. A research committee tasked with researching cryptocurrencies and digital assets and developing policy recommendations was established by the Vietnamese Ministry of Finance in May of that year.
Besides the State Bank, the group also comprises the country’s securities regulator, the Department of Banking and Financial Institutions, the General Department of Vietnam Customs, and other government departments and agencies.
As cashless payments continue to grow in popularity in Vietnam, Hunh Phc Ngha, deputy director of the Institute of Innovation at the University of Economics in Ho Chi Minh City (UEH), told reporters that the State Bank’s recognition of digital currencies would help to accelerate the process even further.
According to Ngha, “digital money is an unavoidable trend,” and completing the pilot would assist the government in evaluating the advantages and disadvantages of different methods as well as exploring suitable management mechanisms.
Another interviewee, Lê t Ch, who is the deputy dean of the University of Hong Kong’s Finance Faculty, emphasised that responding quickly would be essential for the nation to remain competitive, given the growing momentum behind CBDCs.
According to Viet Nam News, the issue of CBDCs may be beneficial for smaller nations operating in a global financial system dominated by the United States dollar, and to a lesser degree, the euro and the yen.
Ch, on the other hand, in addition to asking for an acceleration of CBDC research and development, emphasized the possible dangers to the country’s financial and monetary stability in the statement.
As stated by a spokesperson from NextTech Group, which is an association of businesses focusing on digital commerce in South East Asia, the country of Vietnam must define cryptocurrencies in order to be considered a legitimate currency.
Prior to the establishment of the government’s study committee in May 2020, authorities from the Vietnamese police department warned people against participating in cryptocurrency investment scams.
Due to the fact that the cryptocurrency sector is currently uncontrolled in Vietnam, the country’s Ministry of Finance issued a public warning to the public in March regarding the dangers of bitcoin investing.