Singapore, Cambodia among Asean countries eyeing digital currencies to promote e-commerce, payment efficiency

  • Southeast Asia a very fertile ground for digital payments innovation, (BIS) Innovation Hub executive says
  • A lot of room to grow in the internet economy in Southeast Asia, says the National Bank of Cambodia

Cental banks in several Southeast Asian countries are exploring the use of digital currencies to enhance payments efficiency and to encourage start-ups and e-commerce 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, Southeast Asia has seen a lot of start-ups come up in digital payments, e-commerce and cryptocurrencies.

“Southeast 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 e-commerce growth, typically it goes fairly well with new payment mechanisms.”

Nolens said this during a panel discussion at the China Conference: Southeast Asia event hosted 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 Southeast 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 start-ups 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.