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Intro: The Prime Minister of Vietnam Pham Minh Chinh has asked the State Bank of Vietnam to conduct a study about the pilot for a digital currency.
The digital currency fever has come to Vietnam now. The Prime Minister of Vietnam Pham Minh Chinh has asked the State Bank of Vietnam to conduct a study about the pilot for a digital currency.
Now, the State Bank of Vietnam is all set to become the latest central bank to dig deep into the feasibility and operation of central bank digital currencies (CBDCs).
A pilot project in full swing
The bank will be trying digital currency in the pilot project built on blockchain technology. It would not have a centralized protocol. As per the report out on July 3, the Prime Minister has announced this initiative as part of his wider e-government development strategy. The pilot will be done for a period of three years. The central bank is expected to work on the development and implementation from 2021-2023.
There are big names in the country associated with politics who embraced blockchain technology. However, they remained away from the hostility towards decentralized currencies that have popularized the underlying protocols.
Bitcoin ban
The country was not in favour of cryptocurrencies and had banned bitcoin as a means of payment in 2018. But the individuals and enterprises were given the green signal to privately invest in crypto.
The credit institutions were asked to stop the services given to the digital related activities. The ban was soon followed then. This restriction was posed to mitigate money laundering risks. Despite the moves, the regulatory framework has not been developed in the country for crypto exchanges operating in the country.
But this has begun to change since spring of 2020. The Vietnam Ministry of Finance established a research group charged with studying and making policy proposals regarding cryptocurrencies and digital assets. The group consists of State Bank, Securities regulator, the Department of Banking and Financial Institutions and The General Department of Vietnam Customs and others.
Embracing CBDCs
The Deputy Director of the institute of innovation at the University of Economics, Huỳnh Phước Nghĩa, said that the country is going towards a cashless economy and with this step taken by the State Bank, will help further accelerate the process.
He believes that digital money is an inevitable trend. The pilot will help the government to understand the pros and cons of various approaches and to explore appropriate management mechanisms.
Le Dat Chi, the Deputy Head of UEH’s Finance Faculty stressed that acting fast would be necessary for the country to be competitive as momentum behind the CBDCs continues to grow.
As per the content of Viet Nam, an English daily, the CBDCs’ use is good for smaller countries with the US Dollar is dominated much and little followed by Euro and Yen. He, however, is worried about the potential risks for the country’s financial and monetary policy.
Before the setting up of the research group by the government in May 2020, the police in Vietnam had requested the people to not invest in cryptocurrencies or any investment scheme related to crypto. In March 2021, the Ministry of Finance warned the public about the risks of cryptocurrency investments. The country’s unregulated status is still intact despite the approval of the pilot project.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
