Today the Nikkei reported that Japanese blockchain firm Soramitsu has landed feasibility studies for central bank digital currency (CBDC) with both Vietnam and the Philippines. The blockchain firm later confirmed that it will also work with Fiji and the projects are in conjunction with the Japanese Ministry of Economy, Trade and Industry (METI).
Soramitsu is establishing a considerable footprint in Southeast Asia following its successful implementation of Cambodia’s Bakong project in 2020. Last year it also started working with Laos’ central bank on a CBDC research project. The Nikkei states that a joint venture with Laos will be set up this year, and a state-backed Japanese institution (we’re guessing JIC) might participate.
A key motivation is the expanding reach of Chinese payment apps Alipay and WeChat Pay and the rollout of the digital yuan, which they anticipate will be used in their countries. Vietnam, in particular, has been targeting de-dollarization, and its dollarization rate is low compared to Cambodia and Laos.
Without its own digital currency, the country could win the battle against dollarization only to be swamped with the renminbi. In the middle of last year, the Vietnam government instructed the central bank to pilot a CBDC using blockchain.
Meanwhile, the Philippines has been working on a wholesale CBDC project. We asked Soramitsu whether it is this project they will be working on, but we didn’t receive a response in time for publication.
In January, Soramitsu partnered with the Asian Development Bank to test cross border securities settlements using blockchain. Besides its strong track record in the region, Soramitsu also boasts significant blockchain technology experience. It developed the Hyperledger Iroha blockchain and has recently been involved in public blockchain and DeFi projects such as Polkadot-based Sora and a partnership with Korea’s Klaytn blockchain to develop a decentralized exchange. This combination of experience means that Soramitsu brings considerable innovation skills to the table.
Update: added details re Fiji and METI