Vietnam’s Prime Minister, Pham Minh Chinh, has asked the country’s central bank to conduct a cryptocurrency study and pilot the implementation of a blockchain-based currency within the next two years. The initiatives are part of the Asian nation’s new e-government strategy.
The Prime Minister’s Decision Highlights Cryptocurrency
One of the highlights of the Vietnamese premier’s recent decision on the establishment of a digital government is cryptocurrency. “Cryptocurrency based on blockchain is one of the core technologies Vietnam hopes to develop and master,” Vietnam Plus stated in a report, clearly referring to a state-issued coin. According to the English-language news outlet, other priority areas include artificial intelligence, big data, and augmented and virtual reality.
However, before mastering crypto, the Vietnamese government must establish specific definitions for the various types of digital currencies and virtual assets, as well as comprehensively regulate the crypto space. The Ministry of Finance formed a working group in April of last year to investigate the issue and propose regulatory policies.
In the past, the State Bank of Vietnam (SBV) has warned that cryptocurrencies like bitcoin are not legally recognised in the country. The same is true for their use as a form of payment. The central bank has previously instructed financial institutions not to treat cryptocurrency as currency, and the regulator has yet to licence any coin trading platforms.
According to Huynh Phuoc Nghia, deputy director of the Institute of Innovation at the University of Economics in Ho Chi Minh City, it is time for the Hanoi government to study and implement a digital currency pilot programme. The professor emphasised:
Digital currency is an unavoidable trend.
The pilot implementation should assist the executive branch in identifying both positive and negative aspects, as well as developing a “more appropriate management mechanism,” according to Nghia. The SBV’s recognition of digital currencies, in his opinion, will facilitate this process.
Vietnam is catching up to other countries in the digital currency race.
Le Dat Chi, deputy head of the university’s Finance Faculty, believes that the research should be accelerated in order for Vietnam to advance in the global race for digital currencies. According to a survey he cited, central banks all over the world are at various stages of their efforts. Over 60 institutions have already begun testing digital currency use, while others are developing plans for pilot implementation, and a third group of banks is simply watching developments. Vietnam wishes to proceed to the second stage.
Traditional currencies, such as the US dollar, euro, and Japanese yen, have a greater impact on the global currency basket and international trade than other fiat currencies, according to Vietnam Plus. However, the publication points out that in the race to develop and apply new technologies, countries such as Vietnam will have an opportunity to increase their influence on the global financial system.
China, Russia, the United States, and the Eurozone are among the central banks working on projects to issue central bank digital currencies (CBDCs). The People’s Bank of China has the most advanced project thus far, with numerous domestic trials currently underway and a plan to test the digital yuan (e-CNY) in cross-border transactions with Hong Kong.