Key Takeaways
- Vietnam set to develop national digital currency (digital dong)
- Digital Dong part of governments plans to develop innovative technologies
- Financial expert believes better knowledge of crypto is needed for Vietnam to develop CBDC
Vietnamese Prime Minister Pham Minh Chinh has directed the country’s central bank to launch a digital dong within the next two years. This development was revealed in a press release on July 4. The report stated that the pilot project was part of a strategy to develop the digitization of the e-government.
Vietnam intends to develop innovative technologies like blockchain, artificial intelligence, augmented reality, virtual reality, and big data in the coming years. According to Pham Minh Chinh, central bank digital currencies (CBDC) are inevitable, unlike cryptocurrencies.
Vietnam has a hard stance towards cryptocurrencies and stated in 2017 that digital currencies are not recognized as legal tender. The Central bank further banned their use by banking institutions, and no cryptocurrency exchange has been licensed in the country.
This latest development is a chance for the country to influence the global financial system by deploying the digital dong. However, Vietnamese financial expert Le Dat Chi believes that proper knowledge of cryptocurrencies will be needed for the country to gain an advantage in the CBDC race.
According to Le Dat Chi, the government has moved from the initial observation phase to a pilot phase for its digital currency. He warned that Vietnam must be aware of potential risks to its financial and monetary security.
CBDCs have emerged as a response to the threat of cryptocurrencies to global finance. Vietnam joins a long list of countries looking to develop their digital currencies. China leads the way with its acceleration program for its digital yuan.
It will be interesting to see if CBDCs will hurt the growth of public cryptocurrencies like Bitcoin and Ethereum.
Do you think CBDCs are a threat to traditional cryptocurrencies like Bitcoin and Ethereum?
