Gaining Currency
China fully digital, Thailand's digital hub, Cambodia e-wallets, Indonesia's digital Rupiah, Philippines digital sandbox, Vietnam's digital Dong, US digital hesitation and EU digital procrastination
UPDATE: Global currency digitalisation moved beyond Bitcoin long-ago. Quantitative Easing drove investors to seek any store of zero interest cash and speculators rushed to crypto. China was first to cut crypto and launch Central Bank Digital Currency (CBDC), but it had been using QR code driven digital wallets for a decade. ASEAN is fast cashing in on China’s lead in digital and the benefits of cross-border digital trade.
Meanwhile both the US and EU are hesitating and procrastinating about adoption, but face fierce opposition from entrenched players such as Visa and Mastercard and the established banks which fear Apple wallet and Stripe and the big telecommunications companies and mobile application behemoths seeking to break traditional banking’s stranglehold on digital currency.
China set the path forward with CBDC and is moving ahead with dollar busting cross-border transactions with its 149 Belt and Road partners. The Long Mekong Daily accepts digital 24/7, but come and meet the team with hard cash if you can spare the time.
Digital yuan boosts Chinese New Year consumption
The digital yuan, e-CNY, represented 0.13% of cash and reserves held by the central bank. For the first time, China included the digital yuan in its calculation of the amount of currency in circulation in December, a first among countries that have adopted a central bank digital currency. The amount of digital yuan in circulation reached 13.61 billion yuan (about $2.01 billion) by the end of 2022, data from the country's central bank showed.
On the first day of the Year of the Rabbit, Li, a citizen of North China's Tianjin municipality, was preparing a red packet for her daughter, a monetary gift traditionally given by the elderly to the younger generation during the Spring Festival.
Instead of withdrawing cash from a bank and putting it in a red envelope, this year, she chose to use the E-CNY mobile application, passing on her blessing with digital fiat currency.
This virtual red packet of 200 yuan ($30) has a lively cover with not only lovely animated images on it but also a message carefully selected by the mother: Try not to be bothered. "Red packet of digital yuan is easy for elderly like me to operate and interesting enough to draw youngsters' attention," said Li.
Issued by the People's Bank of China, China's central bank, digital yuan is positioned as a legal tender, designed to be treated as M0, meaning cash in circulation, such as coins and banknotes. At present, 17 provincial-level regions in China have piloted the use of digital yuan.
During the weeklong Spring Festival holiday, which began on Jan 21 this year, a large number of red packets of digital yuan have also been distributed to residents across the country to stimulate the consumer market. Cities including Beijing, the capital, Hangzhou in the east, and Shenzhen in the south, have issued e-CNY coupons.
Read more here.
Thailand Opens First Digital Free Trade Hub
Thailand has launched its first digital free trade hub in partnership with Alibaba, as the country looks to upgrade its logistics and e-commerce sectors.The hub is a free trade area in Thailand’s Eastern Economic Corridor (EEC) designed to facilitate cross-border e-commerce between Thailand and China. The Thai government developed the hub in partnership with the Chinese technology giant as part of the latter’s Electronic World Trade Platform (eWTP), an initiative to promote international e-commerce.
If successful, the digital free trade hub will allow consumers in Thailand and China to buy products from each other’s markets more easily and quickly. The launch of the digital free trade hub is part of Thailand’s efforts to position itself as one of Southeast Asia’s key logistics centers for trade and e-commerce.
The digital free trade hub, sometimes referred to as the Smart Digital Hub, is a zone of 40,000 square meters that benefits from special rules for Thailand-China cross-border trade. The hub is populated by bonded warehouses storing Chinese products to be sold in Thailand, as well as warehouse housing Thai products to be shipped to Chinese consumers who buy them through Alibaba’s platforms.
The hub offers both expedited customs procedures and physical proximity to expedite trade. In a bonded warehouse, a dutiable Chinese product will be stored in Thailand. Planners designed these warehouses to be fully automated.
Read more here.
Cambodia E-wallet accounts hit 17.9M
The number of e-wallet accounts in the Kingdom reached 17.9 million at end-December amid an acceleration in electronic payment volumes driven in part by Covid-19 anxiety, reflecting gradual fintech (financial technology) development towards achieving the government’s digital economy objectives.
The figure was revealed by the National Bank of Cambodia’s (NBC) “Macroeconomic and Banking Sector Development in 2022 and Outlook for 2023” report, which noted that newer advanced technological solutions and upgrades have led to an increase in “the efficiency of payment and settlement in both domestic and international transfers”.
The central bank added that “regional connectivity with other countries has also been strengthened to help facilitate interoperability between banks and financial institutions, thus promoting trade, investment and tourism”. This trend “underscores that our people are gaining a greater understanding of and are becoming more accustomed to using fintech solutions as daily life payment options.
Read more here.
Bank Indonesia to Launch Rupiah Digitalization Program
Bank Indonesia or BI Governor Perry Warjiyo stated that Indonesia would carry out massive digitalization services in 2023. One of them is by launching the Garuda Project, an initiative that underlies the exploration of the design of Indonesia's central bank digital currency (CBDC) or Digital Rupiah.
“We have published a consultative paper and met with big players whom we consider capable, and inshallah, we will issue a proof of concept around July,”
According to him, Digital Rupiah will prepare Indonesia as a developed country through the digitalization of payments and decentralization of the rupiah. BI would also manage and deepen the money market to encourage economic and financial inclusion, MSMEs, the Islamic financial economy, and of course green economy.
“We will also push for the downstream project of the government and several other policies," Perry added.
Quoted from BI’s official website, Digital Rupiah is BI's contribution to the country in a bid to maintain rupiah sovereignty in the digital era. This project complements BI's various initiatives in driving the national digital transformation agenda.
“In particular, efforts to integrate the digital economy and finance in an end-to-end manner have been encouraged through the 2025 Indonesian Payment System Blueprint (BSPI 2025) and 2025 Money Market Development Blueprint (BPPU 2025),” as read on the website.
Read more here.
Philippines to pilot digital currency
THE BANGKO SENTRAL ng Pilipinas’ (BSP) pilot project that tests the use of wholesale central bank digital currency (CBDC) among selected financial institutions will run until 2024, an official said on Wednesday.
“This project was launched in 2022 and will run until 2024. The coverage of the pilot project is wholesale CBDC whereby the BSP will use the test and learn approach using a sandbox environment,”
“So, this will involve transfers of large value transactions among a limited number of participating financial institutions.”
The BSP last year launched the CBDCPh project to better understand the opportunities and risks of wholesale CBDC, as well as address gaps in the national payment system.
The project covers areas including policy and regulatory considerations, technological infrastructure, governance and organizational requirements, legal matters, payment and settlement models, reconciliation procedures, and risk management.
Read more here.
CBDC policy development in Vietnam
The Central Bank of Vietnam currently has published a plan to issue CBDC shortly but is still researching the ability to bring CBDC into force. The current regulations related to the cryptocurrencies of Vietnam have not kept the same pace with the change of globalization. It is time for Vietnam to change the legal frame and create a revolution in technology by issuing CBDC. However, before using CBDC as an official currency, the authorities of Vietnam should first study the advantages and disadvantages of CBDC issuance in the country’s conditions.
Currently, to issue a CBDC, there are two main conditions that a country needs to meet if it wants to smoothly issue a CBDC: a strong blockchain platform and financial inclusion. The followings are some reports related to technological achievements and the data related to blockchain and financial inclusion which have been reached in Vietnam in recent years, these achievements are foundations for Vietnam to base on in issuing CBDC process.
At a ratio of 69%, Vietnam ranks second (after Morocco) in global populations that cannot access financial services and do not have a bank account. There was a report from Agribank (a bank in Vietnam that aim for customers connecting to agriculture) showing that more than 70% of Vietnam’s population is concentrated in rural areas, but the rate of access to modern banking services in this area is still limited.
CBDC is blockchain-based, which means it relies on the developer’s design and programming ability. Therefore, any mistake that constitutes a developer’s vulnerability might lead to unpredictable consequences, especially this is a measure placing for the legal currency.
Read full report here.
The U.S. Dollar in the Age of Digital Transformation
The Federal Reserve is exploring the implications of, and options for, issuing a CBDC. While Americans have long held money predominantly in digital form - for example in bank accounts recorded as computer entries on commercial bank ledgers - a CBDC differs from existing digital money available to the general public because a CBDC would be a liability of the Federal Reserve, not of a commercial bank.
A CBDC could potentially offer a range of benefits. For example, it could provide households and businesses a convenient, electronic form of central bank money, with the safety and liquidity that would entail; give entrepreneurs a platform on which to create new financial products and ser- vices; support faster and cheaper payments (including cross-border payments); and expand con- sumer access to the financial system. A CBDC could also pose certain risks and would raise a variety of important policy questions, including how it might affect financial-sector market struc- ture, the cost and availability of credit, the safety and stability of the financial system, and the effi- cacy of monetary policy.
The introduction of a CBDC would represent a highly significant innovation in American money. Accordingly, broad consultation with the general public and key stakeholders is essential. This paper is the first step in such a conversation. It describes the economic context for a CBDC, key policy considerations, and the potential risks and benefits of a U.S. CBDC. It also solicits feed- back from all interested parties.
Download the full report here.
The digital euro: our money wherever, whenever we need it
ECB’s Fabio Panetta, announces investigation into a digital euro started more than a year ago and is closely involved with the European Parliament in the investigation phase. Such interactions are essential in ensuring that public money addresses the preferences and needs of citizens and businesses in an ever-evolving digital landscape.
People’s payment behaviour is changing at an unprecedented speed: over the past three years, cash payments in the euro area have dropped from 72% to 59%, with digital payments becoming increasingly popular (Chart 1).[3] In the Netherlands and Finland, for example, cash is used only in one fifth of the transactions. At the same time, people appreciate the option to pay with public money. Most see it as important or very important to always have that choice.
Download the full speech here.