This month, it was reported that Vietnamese Prime Minister Pham Minh Chinh asked, in Prime Minister’s Decision No 942/QD-TTg, the State Bank of Vietnam to study and execute a pilot implementation of a central bank digital currency before the end of 2023. Currently, cryptocurrencies are not legally recognized as an asset in the country, nor do any crypto exchanges hold licenses from the central bank. Last year, the country set up a group to study digital assets, with a purview that extended to potentially proposing regulatory mechanisms.
“Vietnam is a country that has had its eye on blockchain, even though they haven’t made many steps towards mainstreaming cryptocurrencies. It is a country that is interested in technology and riding a potential economic wave brought upon by new innovation, from blockchain to AI and VR. But, what’s notable here is that this decision was pushed forward very near the time that many pundits began to ask whether the Chinese e-Yuan would become a digital currency which transcended China and became something of a regional powerhouse as an asset,” said Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.
“I think that’s important. Many countries are looking at what’s happening in China, then taking a look at their own place in the CBDC rat race, and they’re making decisions, I think, which moves up their timetable. This isn’t an innovation where you want to be last to the party. Doing so, in fact, could have ripple effects across a country’s monetary policy,” noted Gardner.
“Digital money is an inevitable trend,” said Huynh Phuoc Nghia, Deputy Director of the Institute of Innovation under the University of Economics Ho Chi Minh City. Some believe that moving quickly to develop a CBDC could give countries like Vietnam greater influence in the global financial system.
“I think it’s too soon to say what kind of ripple effects this development will have. It’s worth noting that Vietnam is in the very early stages. This isn’t a case where they’re ready to begin a pilot test in the short-term. Vietnam isn’t Ghana. But, forging ahead now can only be a positive. It’s better to move forward than continue to wait. Those countries that continue to take a wait-and-see approach are going to find themselves in last place. This is a race you don’t want to finish last. It very well could be the 21st century equivalent to the Race to Space,” opined Gardner.
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Over the past twenty years, the company has built technology for the world’s most notable exchanges, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
“Vietnam is so close in proximity to China, and China is so far ahead in the development of their own CBDC, it was likely the push that they needed to move on this. Earlier this year, some pundits wondered if the e-Yuan would replace the dollar. That’s a premature discussion to have. But, if successfully rolled out, could it have a real regional impact? Absolutely,” Gardner offered.
