Central banks in several South-East Asian countries are exploring the use of digital currencies to enhance payments efficiency and to encourage startups and ecommerce in the region, experts said.
With a relatively young population that has a median age of 30 years and a high percentage of Internet and mobile phone use, South-East Asia has seen a lot of startups come up in digital payments, ecommerce and cryptocurrencies.
“South-East Asia has been a very fertile ground for digital payment innovation,” Benedicte Nolens, head the Hong Kong centre of the Bank for International Settlements (BIS) Innovation Hub, said during a panel discussion. “When you see online ecommerce growth, typically it goes fairly well with new payment mechanisms.”
Nolens said this during a panel discussion at the China Conference: South-East Asia event hosted by the South China Morning Post on Thursday.
Central bank digital currencies, or CBDCs, have been growing in popularity in Asia. China started developing its e-yuan in 2014 while Hong Kong is also studying its own e-HKD. The Hong Kong Monetary Authority, the city’s de facto central bank, has been working with the People’s Bank of China and counterparts in Thailand and the United Arab Emirates on project “mBridge” to establish a CBDCs settlement platform.
Elsewhere, Singapore last year teamed up with central banks in Australia, Malaysia and South Africa, along with BIS Innovation Hub, to explore “Project Dunbar” for the development of platforms for the cross-border settlement of different CBDCs.
“There is a lot of room to grow in the Internet economy in South-East Asia. Cambodia is a small country of 16 million people, where we have about 20 million mobile phone subscriptions,” said Serey Chea, Assistant Governor of the National Bank of Cambodia. It’s like a newborn baby who immediately is given a mobile phone subscription, or two or three subscriptions, she added.
Covid-19 had over the past two years boosted the digitalisation of economies, after many governments imposed lockdowns and encouraged people to shop online, Chea said. This had boosted digital payments in Cambodia and the rest of the world.
Singapore has seen the number of technology startups increase by 10 times since 2015, with traditional lenders such as DBS setting up platforms for the trading of cryptocurrencies such as bitcoin.
“It is a very interesting progression here in Singapore, because more people are interested in cryptocurrencies,” said Frederick Fung, chairman of the Association of Crypto Currency Enterprises and Start-ups in Singapore. He said it was not just the young who were interested in cryptocurrencies – older customers were also adopting digital payments.
Nolens at BIS Innovation Hub dismissed concerns about security and privacy. “Cash is the most anonymous instrument that exists today. So if cash goes digital, is actually easier to monitor than if cash is purely on paper, or in the form of coins,” she said. – South China Morning Post