Need to distinguish between virtual money, electronic money, digital money
Responding to the National Assembly on June 8, Governor of the State Bank Nguyen Thi Hong said that over the past time, electronic money and virtual money are issues of great public interest. These are concepts that need to be clarified.
According to Ms. Hong, electronic money is the expression of legal currency, or currency issued by the Central Bank. When a person has paper money, coins but does not hold it but stores it in electronic form in mobile devices, computer networks… that is electronic money.
“Cryptocurrency requires a 1:1 ratio with fiat money. We are paid in this currency,” said the Governor of the State Bank.
The State Bank has issued circulars and regulations on e-wallets. These are actually cryptocurrency regulations. The State Bank is drafting Decree 101 on Non-Cash Payments and will clarify this concept further.
“In fact, now there is a concept of virtual money, virtual assets that we often talk about like Bitcoin. This is not a fiat currency issued by the central banks of other countries, but created by organizations in the private sector on the basis of computer network algorithms,” said Ms. Hong.
According to the Governor of the State Bank of Vietnam, virtual currencies like Bitcoin are only recognized in a certain community, such as the gaming community or the technology floor…
Each country in the world has a different way of managing this problem. There are countries that classify virtual currencies and virtual assets as assets, securities for tax collection and trading licensing.
In Vietnam, the Government has assigned functional ministries and branches to research and preside over the development of the legal corridor. The State Bank is assigned the role of coordinating with relevant authorities in this regard.
Sharing more about another concept that is digital money, Ms. Hong said that this is a currency issued by the Central Bank in the form of electronic money. Currently, countries around the world are in the process of research and testing.
In Vietnam, the Government has assigned the State Bank to set up a committee to research and test digital currencies.
“Currently, this committee has held a number of sessions and is in the research phase, consulting experiences from countries around the world,” said the Governor of the State Bank.
Should Bitcoin be called “digital money” or “virtual money”?
Sharing views on the calling of Bitcoin and cryptocurrencies, Dr. David (Germany) Tran said that in both social life, the mass media or even the National Assembly, people often call Bitcoin a virtual currency, which is not really accurate.
Dr. David (Germany) Tran is Associate Professor of Computer Science and Director of the Research Laboratory for Network Computing, University of Massachusetts (Boston, USA). In Vietnam, he is currently the head of the Blockchain program at the Institute for Advanced Study in Mathematics.
According to him, the definition of electronic money, virtual currency and digital currency just given by the Governor of the State Bank at the National Assembly is not good.
Explaining his point of view, Dr. David (Germany) Tran said that the above currencies are all cryptocurrencies.
“Bitcoin or CBDC (digital currency as the State Bank calls it – PV) is also a cryptocurrency, but it is a digital currency, so both are digital currencies. Therefore, the State Bank’s definition of calling CBDC a digital currency, and Bitcoin as a virtual currency (but not a digital currency) is not correct,” said Dr. David (Germany) Tran.
According to him, Bitcoin is the first and most popular cryptocurrency application in the world. Later, when the State Banks saw the beauty of cryptocurrencies and the danger of the popularity of Bitcoin affecting their national finances, then CBDC was noticed. Therefore, this expert believes that the definition given by the State Bank is not good in both logic and technique.
Proposing on this issue, Dr. David (Germany) Tran said that all types of money such as virtual money, electronic money and digital money as the state calls it are electronic money.
In which, fiat money used in e-wallet-type applications should be called “fiat electronic money” (eg cryptocurrency VND). Bitcoin will be called “cryptocurrency”, stablecoins will be called “stable digital currency”.
As for the case of CBDC or a digital currency issued by the Central Bank, Dr. David (Germany) Tran suggested calling this “central digital currency” to make it easy to distinguish. With digital currency issued by the State Bank of Vietnam, this expert thinks that this should be called “VND digital money”.