Several news outlets in Vietnam have reported that the government has instructed the State Bank of Vietnam to pilot a national digital currency based on blockchain. While it seems this will be a central bank digital currency (CBDC), some have reported that it will be a cryptocurrency. That may in part relate to the semantics of the terms virtual or digital currency.
News outlet Thani Nien included commentary from Th.S. Huynh Phuoc Nghia, from the Ho Chi Minh City University of Economics.
“Currently, the traditional currencies of the US, Euro, Japan … have had a great influence in the world currency basket and international trade,” said Nghia. “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.”
The reasons why a digital version of the Vietnamese dong would be relatively more popular than other digital currencies are unclear.
The State Bank of Vietnam has been given a timescale of 2021-2023 to research, develop and pilot the digital currency.
Meanwhile, in April 2020, the Ministry of Finance established a working group to explore digital assets and digital currencies. This is likely to have included cryptocurrencies.
In 2017 the State Bank of Vietnam issued an edict stating that cryptocurrencies are not recognized as a means of payment.
Vietnam is geographically surrounded by countries that are some of the most advanced in developing digital currencies. China is in the late stages of piloting the digital yuan. In October last year, Cambodia launched Project Bakong, which is widely described as a central bank digital currency system, despite objections from the central bank, which positions it as a payments system. On Cambodia’s other border is Thailand, which has done multiple CBDC research projects as part of Project Inthanon and recently appointed a provider to develop a CBDC prototype. Thailand is also exploring CBDC (or M-CBDC) for cross border payments with Hong Kong, China and the UAE.