Cambodia has announced the launch of its long-awaited blockchain-based digital currency program called “Bakong.”
While Bakong was backed by the National Bank of Cambodia (NBC), it’s different from a typical Central Bank Digital Currency (CBDC) in that it wasn’t issued by the NBC.
Nikkei Asia reports that Bakong is instead issued through several partner financial institutions in Cambodia under the NBC’s supervision. The scheme will permit Cambodian residents with a smartphone to carry out transactions using Cambodian riel (KHR) or U.S. dollars.
#CBDC #Fintech Cambodia officially launches digital currency backed by central bank
The e-money "Bakong", an initiative of National Bank of Cambodia, joins a very small group of digital currencies backed by central banks that have gone fully operational.https://t.co/iOGUJ5emck
— Paul Triolo (@pstAsiatech) October 28, 2020
How It Works
According to reports, Bakong works by means of a smartphone app that will function as a digital wallet, enabling users to transfer money and make payments using QR codes of phone numbers.
This will likely boost financial inclusion in a country, which according to 2019 KPMG research, had just 5% of its population covered by conventional banking services.
As of 2016, Cambodia’s mobile phone penetration rate was a staggering 93.7%, while its smartphone penetration rate in 2020 stands at 58%, up sharply from just 20% in 2013. These phenomenal figures have been attributed to the influx of relatively cheap Android smartphones from Chinese brands like Huawei.
Speaking on Oct 28 at the launch of Bakong in Phnom Penh, the NBC’s director-general of central banking, Chea Serey stated that the CBDC would not only boost financial inclusion and economic growth, but also help mitigate against the spread of the novel coronavirus.
In her words:
“I hope the official launch of [the] Bakong system today will help to promote social welfare and also prevent the spread of that disease through facilitating e-payment from person to person seamlessly without involving cash.”
CBDC’s Taking Over the World?
On Oct 21, BeInCrypto reported that the Central Bank of the Bahamas launched the world’s first fully operational CBDC, the Sand Dollar.
According to the bank, the Sand Dollar is expected to enable easy and cheap micropayments, as well as improve financial inclusion within the Caribbean island’s relatively underserved population.
On Sep 9, payments giant Mastercard revealed that it had launched a CBDC testing platform for central banks around the world to evaluate their CBDC use cases.
Amid all of this, Cambodia has now become only the second country in the world after the Bahamas to launch a fully operational CBDC program after nearly a year of testing, beginning in July 2019.
According to reports, 20 financial institutions in the country are taking part in Bakong, with more expected to join as the project gains steam.