Phạm Minh Chính, the prime minister of Vietnam, has mandated the country’s Central Bank to study and pilot cryptocurrency implementation.
This puts Vietnam’s State Bank as the first bank of a country to explore the practicability and functions of central Bank Digital currencies (CBDCs).
The country’s State Bank is about to test a cryptocurrency created on blockchain technology and not a centralized project.
On July 3, 2021, a report from the English-language daily Viet Nam News reveals that Phạm Minh Chính, the Prime Minister made the announcement. The PM categorized the initiative as part of his broad developmental strategy in e-governance.
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The report also reveals that the State Bank will develop and implement the pilot from 2021 to 2023. This will help to promote cashless payments and a more formidable digital government.
PM Plans To Develop A Digital Government Through Cryptocurrency Adoption
Vietnam wants to develop and master blockchain-based cryptocurrency in its core technologies. Other technologies that the government wants to utilize include artificial intelligence (AI), Virtual reality (VR), augmented reality (AR), and big data.
All these are expected to facilitate significant breakthroughs and the right conditions to achieve a digital government.
Several politicians in the country accepted blockchain technologies in their functionalities. However, they’ve been hostile to the decentralized currencies that gave popularity to the digital projects.
In 2018, the country banned the use of Bitcoin as a means of payment. Despite this ban, enterprises and individuals still retained their rights to invest in cryptocurrencies privately.
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After the ban, the country also gave a directive to credit institutions to closely regulate services given to cryptocurrency-related activities.
This restrictive order was to control activities associated with money laundering and its risks. Irrespective of the government moves, there’s no official regulatory framework for cryptocurrency exchanges functioning in the country.
From the 2020 spring, there’s a subtle shift in the hostility over digital assets. Vietnam’s Ministry of Finance proposed the establishment of a research group in May 2020. The group will study and develop policy proposals concerning.
The daily chart shows that the entire cryptocurrency market is down by 3% while bulls are battling to gain control over the market.
The research group comprises the State Bank, the General Department of Vietnam Customs, the Department of Banking and Financial Institutions, etc.
Issuance Of Central Bank Digital Currency (CBDC)
The deputy director of the Institute of Innovation at the University of Economics Ho Chi Minh City (UEH), Huynh Phuoc Nghia, discussed with some reporters.
Nghia said there’s already an increase in cashless payment in the country. He said that it’s now very necessary for the State Bank to recognize cryptocurrencies.
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These digital assets will assist will in promoting the process of cashless flow. According to Nghia, he sees digital cash as an inevitable trend.
Thus, implementing the pilot will enable the government to evaluate both the pros and cons of its use. This will also create room for the device the right management mechanisms.
Notably, the head of UEH’s Finance Faculty, Le Dat Chi, makes his contribution on the issue. Furthermore, he stated that quick action is needed to push the country on top since there’s increased support for CBDCs.
According to Viet Nam News, CBDC issuance may be more profitable for smaller countries. It’s because, the U.S. dollar already has great dominance globally, as well as the Euro and Yen, though less prominently.
In addition, Chi mentioned the possible risks for the financial and monetary security of the country. Moreover, a NextTech Group representative contended the importance of determining the official stand for cryptocurrency for Vietnam.
Featured image from Pixabay, chart from TradingView.com