Although the government has stated that a sovereign digital currency will not replace the country’s fiat currency, Vietnam is the newest country to study a central bank digital currency (CBDC).
According to Nikkei Asia on Monday (July 12, 2021), the Vietnamese government decided to investigate the construction of a CBDC based on Prime Minister Nguyen Xuan Phuc’s decision 942 made in June. Between 2021 and 2025, the strategy aims to create a digital government.
Mr. Nguyen Thanh Binh, Coordinator of the Fintech Crypto Center at RMIT University Vietnam, confirmed that Government Decision 942 can create favorable conditions for the construction of a CBDC. He also suggested that the Vietnamese government could keep an eye on digital currency initiatives in other countries.
Binh also said Vietnam is working on setting up a fintech regulatory sandbox that could include piloting a digital currency. On the other hand, CBDC is not a substitute for Vietnamese dong.
The Vietnamese government had previously asked the State Bank of Vietnam (SBV) to conduct a trial with a blockchain-based digital currency. The pilot project will be implemented from 2021 to 2023.
While Vietnam appears to have joined the growing list of countries experimenting with CBDCs, Vietnam hasn’t always been bitcoin-friendly. In 2018, Vietnamese Prime Minister Nguyen Xuan Phuc, now the country’s president, ordered financial institutions not to offer cryptocurrency-based services to consumers.
The country’s finance minister proposed a ban on imports of crypto mining equipment that same year. The authorities also prohibit companies from handling cryptocurrencies. A former Vietnamese police commander warned against involvement in Bitcoin fraud in late 2020.
However, in May of that year, the Vietnamese Ministry of Finance announced that it was considering forming a research committee to analyze and recommend regulatory laws for the cryptocurrency industry.
CBDCs are growing in popularity, with many central banks experimenting or experimenting with sovereign digital currencies. In July, the Bank of Jamaica announced that it would launch a pilot program for CBDCs in August.
Despite its skepticism about cryptocurrencies, the Vietnamese government has discovered a way to take advantage of blockchain technology. The Vietnamese Ministry of Education and Training put its high school and university diplomas on blockchain last year.
The Vietnamese government is calling for greater use of blockchain, including electronic identification systems (eKYC), although details are not yet to be released. If things continue at this pace, Vietnam could overtake Malta in blockchain education.
New Zealand is also considering a digital currency, while Japan’s plan for a digital yen is expected to be finalized by 2022.
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