In a bid to modernize financial systems and counter the growing influence of foreign digital payment platforms, both the Philippines and Vietnam have embarked on feasibility studies for central bank digital currencies (CBDCs) with the assistance of Japanese blockchain firm Soramitsu. This move signals a broader trend across Southeast Asia to harness blockchain technology for economic sovereignty, amid concerns over the expanding reach of Chinese payment apps and the digital yuan.
A Regional Push for Digital Innovation
The collaboration with Soramitsu, a Tokyo-based company with a proven track record in the region, underscores a strategic pivot toward digital currencies in Southeast Asia. The firm has confirmed its involvement in CBDC feasibility studies not only with Vietnam and the Philippines but also with Fiji, supported by the Japanese Ministry of Economy, Trade and Industry (METI). This partnership builds on Soramitsu’s earlier successes, notably the implementation of Cambodia’s Bakong project in 2020, a digital payment system that has gained significant traction as a tool for financial inclusion.
Soramitsu’s footprint in the region is expanding rapidly. Last year, it initiated a CBDC research project with Laos’ central bank, and reports from Japanese media outlet Nikkei suggest that a joint venture in Laos could be established this year, potentially involving a state-backed Japanese institution. This growing network of partnerships positions Soramitsu as a key player in shaping the future of digital finance in Southeast Asia, a region where economic and geopolitical stakes are increasingly intertwined with technological advancements. 
Vietnam’s Battle Against Dollarization
For Vietnam, the pursuit of a CBDC is closely tied to its long-standing goal of de-dollarization. Despite having a relatively low dollarization rate compared to neighbors like Cambodia and Laos, the country remains wary of losing ground to foreign currencies, particularly the Chinese renminbi, as digital payment platforms such as Alipay and WeChat Pay gain popularity. The fear is that without a domestic digital currency, Vietnam could win the fight against the US dollar only to find its economy increasingly reliant on China’s digital yuan.
Midway through last year, the Vietnamese government directed the State Bank of Vietnam to pilot a CBDC using blockchain technology. This directive reflects a broader recognition of the transformative potential of digital currencies to strengthen monetary control and reduce dependence on external financial systems. While specific details of the pilot remain under wraps, Soramitsu’s involvement suggests that Vietnam is leveraging cutting-edge expertise to ensure the project’s success.
The economic implications of a Vietnamese CBDC are significant. A digital currency could streamline transactions, enhance financial transparency, and bolster the central bank’s ability to implement monetary policy. However, challenges remain, including the need to build robust technological infrastructure and address cybersecurity risks, particularly in a region where digital literacy varies widely.
Philippines’ Focus on Wholesale CBDC
In parallel, the Philippines is exploring a wholesale CBDC, which would primarily facilitate transactions between financial institutions rather than directly serving retail consumers. The Bangko Sentral ng Pilipinas (BSP) has been working on this initiative for some time, though the specifics of Soramitsu’s role in the project remain unclear. The focus on a wholesale model indicates a cautious approach, prioritizing efficiency in interbank settlements before considering a broader retail rollout.
The Philippines’ interest in a CBDC aligns with its broader digital transformation agenda. The country has seen rapid growth in digital payments, accelerated by the pandemic, but it also faces challenges such as financial exclusion in rural areas and the high cost of cross-border remittances. A wholesale CBDC could potentially address some of these issues by reducing transaction costs and improving the speed of settlements, though its impact on everyday Filipinos remains a longer-term question.
Geopolitical considerations also loom large. Like Vietnam, the Philippines is wary of the growing influence of Chinese digital payment systems. A domestically controlled digital currency could serve as a buffer against external economic pressures, reinforcing national sovereignty in an increasingly interconnected financial landscape.
Soramitsu’s Regional Expertise and Technological Edge
Soramitsu brings a wealth of experience to these projects, having established itself as a pioneer in blockchain technology. Beyond its work in Cambodia and Laos, the firm has developed the Hyperledger Iroha blockchain, a platform designed for scalability and security in financial applications. More recently, Soramitsu has ventured into public blockchain and decentralized finance (DeFi) initiatives, including collaborations with Polkadot-based Sora and Korea’s Klaytn blockchain to develop a decentralized exchange.
In January, Soramitsu also partnered with the Asian Development Bank to test cross-border securities settlements using blockchain, a project that highlights its capability to innovate in complex financial ecosystems. This combination of regional experience and technical prowess makes Soramitsu a natural partner for countries like Vietnam and the Philippines as they navigate the uncharted waters of digital currencies.
Geopolitical and Economic Stakes
The push for CBDCs in Southeast Asia cannot be divorced from broader geopolitical dynamics. The rollout of China’s digital yuan, officially known as the Digital Currency Electronic Payment (DCEP), has raised alarms across the region. Analysts suggest that the digital yuan could become a tool for economic influence, particularly in countries with close trade ties to China. For nations like Vietnam, which shares a border and a complex history with China, the stakes are especially high.
At the same time, the dominance of Chinese payment apps like Alipay and WeChat Pay in regional markets has prompted governments to seek alternatives that prioritize local control. A CBDC offers a potential solution, allowing central banks to maintain oversight of digital transactions while reducing reliance on foreign platforms. However, the development and deployment of such systems require significant investment, technical expertise, and public trust—challenges that Soramitsu and its partners must address.
Economically, CBDCs hold the promise of greater financial inclusion, particularly in countries with large unbanked populations. By enabling direct transactions without intermediaries, digital currencies could lower costs and increase access to financial services. Yet, they also raise concerns about privacy and surveillance, as central banks would have unprecedented visibility into transaction data. Striking a balance between innovation and individual rights will be a critical test for policymakers in the region.
Challenges and Opportunities Ahead
As Vietnam and the Philippines advance their CBDC studies, several hurdles loom on the horizon. Technological infrastructure remains a key concern, particularly in rural areas where internet connectivity and digital literacy are limited. Cybersecurity is another pressing issue, as a digital currency system would be an attractive target for hackers and state-sponsored actors. Governments will need to invest heavily in safeguards to protect against breaches that could undermine public confidence.
Public acceptance is equally critical. While younger, tech-savvy populations may embrace digital currencies, older generations and those in remote areas may be more resistant. Education campaigns and pilot programs will be essential to demonstrate the benefits of CBDCs and address concerns about privacy and security.
On the opportunity side, a successful CBDC could position countries like Vietnam and the Philippines as leaders in financial innovation. By reducing reliance on cash and foreign payment systems, these nations could strengthen their economic resilience and attract investment in fintech. Moreover, regional collaboration—potentially facilitated by firms like Soramitsu—could lead to interoperable digital currencies, easing cross-border trade and remittances in a region known for its economic dynamism.
Looking to the Future
The involvement of Soramitsu in CBDC projects across Southeast Asia marks a pivotal moment in the region’s financial evolution. For Vietnam and the Philippines, the feasibility studies are just the beginning of a journey that could redefine how money is managed and transacted. As these initiatives progress, their ability to balance technological innovation with economic and geopolitical realities will be closely watched.
Whether CBDCs can deliver on their promise of greater sovereignty and inclusion remains an open question. What is clear, however, is that the race to digitize money is accelerating, and Southeast Asia is positioning itself at the forefront of this global shift. As developments unfold, the region’s experiments with digital currencies could offer valuable lessons for the rest of the world.
