VietNamNet Bridge – Though the State Bank of Vietnam (SBV) has confirmed bitcoin is not a legal currency and that it must not be used in payment transactions in Vietnam, executive bodies have not been able to close the bitcoin trading floor.
Nguyen Xuan Thanh, director of the Fulbright Economics Teaching Program (FETP), warned that if bitcoin, like Vietnam dong and other hard foreign currencies, is recognized as a legal currency in Vietnam, it will be very difficult for the State Bank to manage monetary policies.
Dollarization, or the presence of the dollar in a high percentage of transactions in the national economy, has been a big headache for the State Bank. The situation is believed to have become even worse with “bitcoinization”.
The measures which the central bank uses to regulate the monetary market, such as withdrawing Vietnam dong from circulation and increasing money supply to stimulate the demand, will bring weaker effects or will be in vain, depending on the bitconization level.
In other words, when bitcoins jump into the monetary market, the Vietnam dong will have to share its power with bitcoin.
This is the thing the watchdog agency does not want to see, because it will only control the Vietnam dong and cannot do this with bitcoin.
Another banking expert said if bitcoin is recognized as a legal currency, it will be used in all kinds of transactions in the national economy, and therefore, it will have an influence on the inflation rate and the nominal GDP scale in the future.
Since bitcoin is not issued by any country or finance institutions, no one can control the amount of available bitcoins. It is estimated that there are 21 million bitcoins now, but the figure could rise to $50 million or more next year.
Meanwhile, the expert says, the volume of goods and services have not increased accordingly. Therefore, high inflation may occur anywhere bitcoin is recognized as a legal currency.
Though bitcoin is not recognized as a legal currency in Vietnam, a bitcoin trading floor still has been set up. It now reportedly has 1,692 members who make transactions daily.
Why hasn’t the trading floor been forced to shut down by management agencies, if it is illegal in Vietnam?
A high ranking official of C50, the Ministry of Public Security’s Agency for High-tech Crime Prevention, said the State Bank of Vietnam needs to make an official statement about the legitimacy of the existing bitcoin trading floor. It also has to release legal documents, clarifying that running the trading floor is an illegal act.
Only when the central bank does all of the things will executive bodies be able to get involved in the case.
“The State Bank has just said that bitcoin is not accepted in transactions in Vietnam as a payment instrument and a legal currency. And it has just warned bitcoin holders about the high risks in using bitcoins in payment. These are not enough for law enforcement agencies to deal with the case,” he said.
TBKTVN