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Vietnam’s PM asks central bank to explore CBDC based on blockchain

Vietnam’s Prime Minister Phạm Minh Chính has directed the country’s central bank to begin exploring a central bank digital currency (CBDC). However, unlike most central banks which have been exploring a CBDC built on a private ledger, Vietnam will be looking into building its CBDC on the blockchain.

The prime minister has been pushing for e-governance as he seeks to make Vietnam’s government an efficient digital one. He has put emphasis on big data, augmented reality, artificial intelligence and virtual reality.

A report by local outlet Viet Nam News has revealed blockchain may be the emerging technology that’s set to play the biggest role in the country’s digital future. The PM has called on the State Bank of Vietnam to conduct the exploration from 2021-2023.

A national digital currency in Vietnam would greatly boost the growth of digital payments, one local finance expert believes. Huynh Phuoc Nghia, the deputy director of Innovation under the University of Economics Ho Chi Minh City believes that “digital money is an inevitable trend.”

In addition, a digital currency can finally give smaller countries like Vietnam a bigger role in the global financial system, according to Nghia. For decades, the U.S. dollar has dominated, but a digital dong can allow Vietnam a seat at the table in global finance, he said.

He commented, “Currently, the traditional currencies of the U.S., Euro, Japan … have had a great influence in the world currency basket and international trade. But in the race to develop new technology, some believe that many small countries like Vietnam may also have the opportunity to rise up and have an influence on the global financial system instead of traditional currencies.”

While Prime Minister Chính is expressing optimism towards a blockchain-based digital currency, his government has been hostile towards decentralized digital currencies. In 2018, the government banned the use of digital currencies for payments. It followed this by restricting financial companies from servicing digital currency-related entities.

However, holding digital currencies in Vietnam is not illegal for individuals. The Southeast Asian country has also yet to formulate any laws to govern the industry.

Vietnam will join a growing number of Southeast Asian countries exploring digital currencies. Singapore, Indonesia, Cambodia and Thailand are all in varying stages in their CBDC exploration and issuance.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

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