​Asia: The fertile ground for central bank digital currencies

This article is selected from KrASIA, the original title Asia is fertile ground for central bank digital currencies, author: Simone Martin

Imagine how all payment behaviors will be realized without using banknotes? In China, cashless transactions have become quite common, but in most parts of the world, “cash is king” will continue for now. Mobile payment is increasingly being adopted. Research predicts that by the end of 2025, nearly 60% of the world’s population will use mobile payment. With the increasing popularity of mobile payments and cryptocurrencies, countries around the world have been investing resources to build their own central bank digital currencies (ie, CBDC).

The world’s first sovereign digital currency, the digital renminbi, has achieved a transaction volume of 34.5 billion yuan (about 5.34 billion U.S. dollars) during the pilot period. Currently, people can exchange digital renminbi for cash at more than 3,000 ATMs in Beijing. The digital renminbi has been continuously developed since 2014. Currently, the People’s Bank of China is encouraging merchants in popular scenic spots and business districts in first-tier cities to use digital RMB wallets. Experts predict that the digital renminbi will be promoted nationwide after the 2022 Beijing Winter Olympics.

China is operating the world’s most advanced central bank digital currency project. Several other Asian countries are also moving in the same direction, and some countries have started pilot projects within a limited range. The following is a summary of the progress of the digital currency projects of the major central banks in East Asia and Southeast Asia.


Bank Indonesia Governor Perry Warjiyo announced via Instagram on May 30 that the Bank of Indonesia is conducting research to evaluate the possibility of deploying digital rupiah. The Bank of Indonesia takes three factors into consideration: first, digital currency will become a legal payment tool; second, based on technology; third, the digital rupiah will enrich the central bank’s policy toolbox and help the central bank control Indonesia’s money supply .

Indonesia already has a legal digital currency exchange-Digital Future Exchange, which is the result of mutual cooperation among crypto asset trading licensees such as Pintu, Upbit, Indodax, and Zipmex. In the first five months of 2021, the number of cryptocurrency asset traders in Indonesia reached 6.5 million, much higher than the 2.2 million securities traders registered in March. In addition, people are generally willing to use mobile payments in daily transactions, demonstrating the possibility of the arrival of a cashless society.


In June of this year, Vietnamese Prime Minister Fan Myung Tseng instructed the State Bank of Vietnam to “research, develop and pilot a digital currency based on blockchain technology” to promote Vietnam’s government digitalization strategy in 2030.

Vietnamese citizens have always used cryptocurrency as a remittance payment tool and investment tool. According to Statista, although cryptocurrency transactions are currently illegal in the country, Vietnam still ranks second in the world in terms of cryptocurrency use.

Vietnam has not yet announced the details of the cryptocurrency pilot policy, but the recent move by the country’s prime minister shows that Vietnam is looking for directions and exploring new ways to supervise new cryptocurrency technologies.


After reaching a cooperation with the German payment giant Giesecke&Devrient, the Bank of Thailand will begin testing the retail digital baht. It is reported that Giesecke&Devrient is working with at least five central banks to help these countries build their own central bank digital currencies. According to a statement issued on May 27, the digital baht test is expected to cost 10 million baht (about 320,000 US dollars).

According to Reuters, the test of the digital baht will begin in the second quarter of 2022, and the full promotion of the digital baht may take three to five years.

The Bank of Thailand announced in April: “Although there is no need to issue CBDC urgently under current conditions, if privately issued digital currencies are widely adopted in the foreseeable future, and the importance of digital currencies is fully confirmed, the conditions for issuing CBDC will be May become more mature.”

At the same time, Thailand is taking action to restrict other decentralized cryptocurrencies. The Securities and Exchange Commission of Thailand approved a new regulation in June that prohibits the listing of emoji tokens (used in blockchain transactions) on local exchanges, fan tokens, and non-fungible tokens (NFT). And other virtual currencies. The Securities and Exchange Commission of Thailand subsequently filed a criminal lawsuit against Binance in early July, accusing it of operating a digital asset exchange in the country without a license.


The Monetary Authority of Singapore (MAS) has been studying and piloting the concept of central bank digital currency for many years.

According to an official statement, the Bank of Singapore solicited suggestions from financial institutions, fintech companies and other global “players” in June to discuss how to establish and distribute the infrastructure of a commercial CBDC, but it has not yet specified a widely used digital currency. When may it land.

The statement reads that Singapore terminated the five-year Project Ubin in 2020. It is reported that the project represents “an industry exploration led by the HKMA to try to use the blockchain technology and CBDC issued by the HKMA to more effectively clear and settle payment behaviors and securities.”

Project Ubin promotes the development of digital currencies such as XSGD. XSGD is a stable currency pegged to Singapore dollar 1:1, provided by payment solution provider Xfers. As part of Project Ubin, the HKMA also issued a CBDC for financial institutions, which is only used for payments in the banking system and is not open to the public.

Central bank digital currencies in other Asian countries

In October last year, the National Bank of Cambodia introduced Bakong, a blockchain payment system after trial operation. Unlike other CBDC projects in Cambodia, Bakong is a platform that is fully supported by financial allocations and managed by the state, which means that every transaction is supported by the Cambodian currency Riel or U.S. dollar savings. Cambodia sees Bakong as a means to modernize its currency system.

In Malaysia, Bank Negara Malaysia (BNM) Financial Development and Innovation Director Suhaimi Ali said in June that the bank will launch a proof-of-concept project, “to evaluate the value of CBDC, the initial evaluation of the project focuses on the use of financial institutions. CBDC”. Suhaimi added that for now, Bank Negara Malaysia is unlikely to develop commercial CBDC.

South Korea’s leading technology companies SK, Naver and Kakao are competing for partner qualifications with the Bank of Korea, and the country’s CBDC project will start in August. The winning bidder will lead a 10-month pilot project with a budget of US$4.3 million.

Since April, the Bank of Japan has been studying the feasibility of issuing and distributing domestic CBDC. According to Reuters, the first phase of the digital yen pilot project will end in March 2022.

The Bank of India has not yet shared specific plans for the digital rupee, but it mentioned the potential use of CBDC in a report released in March. According to the report, “CBDC design can promote non-anonymity at the level of individual transactions, help monitor transactions, and promote financial inclusion. Interest-bearing CBDC can also increase the economy’s sensitivity to changes in interest rate policies.” However, the Central Bank of India also warned that CBDC poses a “dis-intermediation” risk to the banking system, impacting banks’ transaction media and intermediary role, especially in the context of the commercial banking system being increasingly linked to financial vulnerabilities. Down.

Central bank digital currency on the global front

Central banks all over the world are experimenting with CBDC, whether it’s concept research or landing experiment. For example, in October 2020, the Bahamas launched the country’s first type of nationally deployed digital legal currency-the sand dollar. A report issued by the Bank for International Settlements (BIS) in January found that about 86% of the 65 central banks reported in the report actively participated in the CBDC test project in various forms. The report emphasized that in terms of countries representing approximately 20% of the global population, their central banks are likely to issue a universal CBDC in the next three years.

Compared with decentralized digital currencies, a key advantage of CBDC is its legal currency status, which means that all market entities must accept central bank digital currencies for compliance purposes, especially in countries that recognize the currency. Other advantages of CBDC include faster payment speed and lower international transfer fees. It will also lower financial access barriers for families with no bank accounts and insufficient bank accounts, and promote financial inclusion.

The central bank still needs to overcome several obstacles that lie between CBDC and reality, such as the interoperability between existing and new infrastructure, the role of private participants in the industry, and the difference between general-purpose CBDC and commercial CBDC. However, some experts said that Asia is in a leading position in the central bank digital currency revolution, and a cashless society may come faster than we think.

Text|Yuan Haoyan

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