April 2020 to March 2021

Koichiro Ohira(Chief Fellow, Institute for International Socio-Economic Studies)

   In our interim report for this study, we reported results of our investigation of the token economy established around tokens generated on blockchains. For our final report, we reported on results of our investigation on the situation of the fintech industry in Southeast Asian countries. The main contents of our reports are as follows:

(1) Token Economy
   Efforts are underway to issue and distribute tokens that digitally represent certain rights and property values, and to gain benefits such as improving convenience of settlement and remittance, disseminating new goods and services, and expanding financing options for companies. Current tokens are generated on blockchains, and the entire process from issuance to distribution of tokens is completed on digital networks. In accordance with their nature and usage, tokens are classified into payment tokens (virtual currency), utility tokens, and security tokens. The economic sphere formed around tokens is called the token economy.

   The use of stable coins pegged to fiat currencies and the issuance of central bank digital currency (CBDC) for payment tokens are gaining attention. Likewise, the issuance of tokens representing a wide range of assets, including stocks, bonds, and real estate for security tokens is already gaining ground. Even in Japan, there are now efforts to promote their use, as shown in the launch of relevant industry groups.

 

(2) Fintech situation in Southeast Asia and ASEAN countries
   The major countries in Southeast Asia, which are economically connected despite differences in language and religion, comprise an important region that accounts for 9% of the world's population. While a large proportion of their adult populations do not have or are unable to make full use of bank accounts, mobile phones are widely used, and there is wide acceptance of financial services accessed through smartphone apps. The COVID-19 pandemic has led to the use of a variety of digital services, including e-commerce and online media, and has facilitated the use of fintech services for payment of those services.

   In addition to existing financial institutions such as banks, fintech services are offered by a variety of companies, including specialized startups and companies that provide other digital services such as ride sharing. In particular, Singapore, Indonesia, and Malaysia have a large number of such companies and have become fintech hubs, with some of their companies conducting business across borders.