Cambodia’s digital money project Bakong is working closely with Thailand’s central bank and Malaysia’s largest bank, Maybank to execute CBDC cross-border transactions.
The National Bank of Cambodia (NBC) announced various project milestones as part of its central bank digital currency-like program known as Bakong.
Chea Serey, the director-general of NBC and the Bakong project manager, told The Nikkei on Wednesday that Bakong’s electronic wallet had 200,000 users in June, up from 100,000 three months earlier.
The Bakong payment and money transfer service, which is based on blockchain technology, was first offered by NBC in October 2020.
In the first half of 2021, the digital money project had approximately 6 million users, including those reached indirectly through member bank mobile apps, with 1.4 million transactions totalling nearly $500 million, according to Serey.
The NBC is presently studying cross-border transactions through Bakong, according to the official, and is working closely with Thailand’s central bank and Malaysia’s largest bank, Maybank.
The cross-border Bakong transactions, according to Serey, will allow Cambodians living abroad with a “secure and quick means to send money to their family.” Many Cambodian women travelling to Malaysia will benefit from the new payment mechanism, she said.
According to reports, Bakong’s introduction has greatly expanded the use of Cambodia’s native currency, the riel, which is used alongside the US dollar under the country’s dual-currency system.
She added, however, that the digital money project alone will not be able to convert Cambodia’s economy from one based on the US dollar to one based on the riel.
“There are additional policies that need to be in place, such as having a stable exchange rate and inflation rate,” Serey said, adding that Bakong’s objective is to “expand the usage of the local currency,” with the long-term goal of having the country’s local currency be used “exclusively.”
The US dollar is currently utilized for 90% of financial transactions in Cambodia, according to data from the Wall Street Journal.
NBC’s director-general also expressed reservations about Bitcoin (BTC), the world’s most valuable cryptocurrency. To prevent the implications of unpredictable prices, Serey believes the crypto business requires regulation and consumer protection measures.
“There are no fundamentals, and if you allow investors to go into this… Who is going to take responsibility when the market crashes?” he asks.
Bakong is a mobile app developed by NBC in partnership with Soramitsu, a Japanese blockchain technology startup. It allows Cambodians to pay at stores or send money using a smartphone app, and it supports settlements and remittances in the riel or US dollars.
Bakong should not be referred to as a CBDC, but rather as a payment and money transfer service, according to Serey, who spoke during the project’s debut.