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Asia is fertile ground for central bank digital currencies

Written by Simone Martin Published on   6 mins read

Experts predict the Chinese e-yuan to be available nationwide after the Beijing 2022 Winter Olympics. Across Asia, other nations are also developing their own CBDCs.

Imagine for a second making all your payments without using fiat money. If you are in China, that might be pretty common already, but in most places around the world, cash is still king—for now. Mobile wallets have been increasingly adopted, and studies predict that by the end of 2025, nearly 60% of the world’s population will be using them. With mobile payments and cryptocurrencies becoming more popular each day, countries worldwide have been investing resources to create their own central bank digital currencies, or CBDCs.

The world’s first sovereign e-currency, the digital yuan, has already been involved in transactions worth USD 5.34 billion as part of a pilot project, and can currently be traded for cash at more than 3,000 ATMs in Beijing. The e-yuan has been in development since 2014 and is formally known as the Digital Currency Electronic Payment (DCEP) system. For now, the Chinese central bank is encouraging merchants in tier-1 cities’ popular tourist areas and business districts to utilize DCEP wallets.

Experts predict the digital yuan will be rolled out nationwide after the Beijing 2022 Winter Olympics. Yet, it still has limitations, as it can only be used for specific services and geographical coverage is far from comprehensive.

China is running the world’s most advanced CBDC project. Several other Asian nations are heading in the same direction, with some already launching pilots of limited scope. Here’s a roundup of major CBDC projects across East and Southeast Asia.


Bank Indonesia is conducting research and assessing the possible deployment for a digital rupiah, governor Perry Warjiyo announced on May 30 via an Instagram post. The central bank indicated three considerations: the digital currency will serve as a legal payment instrument, it will be tech-based, and it will support the bank’s policies, including the control of Indonesia’s money supply.

Indonesia already has a legal digital currency exchange, the Digital Future Exchange, as the result of a partnership between licensed crypto asset traders, including Pintu, Upbit, Indodax, and Zipmex. The country had 6.5 million crypto traders in the first five months of 2021, well over its 2.2 million stock traders recorded in March, and people are generally comfortable with using phone-based wallets in their day-to-day transactions.


Vietnam’s prime minister, Phạm Minh Chính, instructed the State Bank of Vietnam to “research, develop, and pilot the use of virtual currency based on blockchain technology” in June, as part of a strategy to digitize the government by 2030.

Vietnamese citizens have been using cryptocurrencies for remittance payments, as well as an investment instrument. Vietnam ranks second in the world in terms of cryptocurrency use, according to Statista, even if currently, using cryptocurrencies to make purchases is illegal in the country.

No other details have been released, but the recent prime minister’s move shows that the country is looking at ways to regulate the new technology.

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The Bank of Thailand (BoT) is set to begin tests for a retail digital baht after enlisting the services of German payments giant Giesecke & Devrient, which is working with at least five central banks in various countries to create their own CBDCs. The project is estimated to cost THB 10 million (USD 320,000), according to a statement published on May 27.

The tests reportedly started in the second quarter of 2021, while the full rollout might take three to five years, according to Reuters.

“Even though there is no immediate need to issue a retail CBDC to the general public under current conditions, the issuance of a CBDC may be appropriate if privately issued digital currencies become widely adopted and systematically important in the near future,” the BoT announced in April.

Meanwhile, Thailand is moving to restrict other decentralized cryptocurrencies. Thailand’s Securities and Exchange Commission (SEC) approved new rules in June that prohibit local exchanges from listing or trading meme coins, fan tokens, non-fungible tokens (NFTs), and other digital tokens that are utilized in a blockchain transaction. The SEC then filed a criminal complaint against Binance in early July for operating a digital asset exchange in the country without a license.


The Monetary Authority of Singapore (MAS) has been studying and experimenting with the CBDC concept for years.

Singapore’s central bank enlisted financial institutions, fintech companies, and other global players in June to gather suggestions on how to distribute and create the infrastructure for retail CBDCs, but has not indicated when it may have a digital currency for broad use, according to an official statement.

In 2020, the country concluded Project Ubin, a five-year program that represented an “industry effort led by MAS to explore the use of blockchain technology and CBDC issued by MAS to clear and settle payments and securities more efficiently,” the statement reads.

The program facilitated the development of digital coins such as the XSGD—a stablecoin pegged 1:1 to the Singapore dollar that was built by payments solution provider Xfers. The MAS, as part of Ubin, also issued a wholesale CBDC that is used solely for payments within the banking system and is not available to the general public.

Singapore’s central bank has been studying and experimenting with the CBDC concept for years. Photo from Shutterstock.

Other CBDC initiatives across Asia

Last October, the National Bank of Cambodia introduced the Bakong blockchain payment system after running trials. Unlike other CBDCs projects, Bakong is an entirely fiat-backed, state-managed platform, meaning every transaction is backed by their riel or dollar savings. The country sees Bakong as a step in modernizing its monetary system.

In Malaysia, the director of financial development and innovation at Bank Negara Malaysia (BNM), Suhaimi Ali, said in June that the bank will initiate a proof-of-concept project to “gauge the merits of CBDC with an initial focus on wholesale CBDCs.” For now, the BNM is unlikely to cultivate a retail CBDC, Suhaimi added.

Major tech firms SK, Naver, and Kakao in South Korea are competing to become a partner of the Bank of Korea for a CBDC project that will start in August. The winning bidder will lead a ten-month pilot program with a budget of USD 4.3 million.

Japan’s central bank has been studying the feasibility of issuing, distributing, and redeeming its own CBDC since April. The first phase will be completed by March 2022, Reuters reported.

The central bank of India has not shared concrete plans for a digital rupee, but it referred to the potential use of CBDCs in a report released in March. “CBDCs can be designed to promote non-anonymity at the individual level, monitor transactions, and promote financial inclusion. An interest-bearing CBDC can also increase the economy’s response to changes in the policy rate,” the report said. Yet, it also warned that CBDCs pose a risk of “disintermediation of the banking system,” particularly in cases where the commercial banking system is perceived as fragile.

CBDCs are seeing global adoption

Central banks across the world are progressing from conceptual research to practical experimentation with CBDCs. The Bahamas, for instance, launched the first fully deployed digital version of a country’s fiat currency in October 2020—the sand dollar. A report by the Bank for International Settlements released in January found that about 86% of 65 central banks have been actively engaged in some form of CBDC project. The same study highlights that central banks collectively representing 20% of the world’s population are likely to issue general purpose CBDCs in the next three years.

A key advantage of CBDCs over decentralized digital currencies is their status as legal tender, meaning all economic actors must accept them for any legal purpose within countries that recognize the currency. Other advantages are faster payments, lower fees for international transfers, and, arguably, improved financial inclusion for the unbanked and underbanked households.

Monetary authorities still need to sort out several hitches with CBDCs, such as the interoperability between existing and new infrastructure, the role of private industry actors, and the distinction between wholesale and retail CBDCs. Nevertheless, Asia is leading the way in the CBDC revolution, experts say, and a cashless future could be closer than we think.

Update: The following story has been updated to reflect new data indicating that China’s digital yuan trials completed USD 5.34 billion in transactions by the end of June.


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