Cambodia is investigating cross-border transactions by CBDC-like Bakong

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The National Bank of Cambodia (NBC) is moving forward with its Central Bank Digital Currency Initiative (CBDC) called Bakong and revealing several project milestones.

NBC’s general manager and Bakong’s project leader Chea Serey said in an interview with The Nikkei on Wednesday that Bakong’s electronic wallet reached 200,000 users in June, doubling from three months earlier. The blockchain technology-based payment and money transfer service Bakong was originally launched by NBC in October 2020.

The digital money project garnered nearly six million users in the first half of 2021, including those reached indirectly through member banks’ mobile apps, and recorded a total of 1.4 million transactions valued at nearly $ 500 million, Serey noted.

The official announced that NBC is currently investigating cross-border transactions through Bakong and is working closely with Thailand’s central bank and Malaysia’s largest bank, Maybank. Serey stated that the Bakong cross-border transactions would provide Cambodian people overseas a “safe and efficient way to send money to their families.” She noted that the new payment method would benefit many Cambodian women who would immigrate to Malaysia.

Serey also reportedly said that the introduction of Bakong has significantly increased the use of Cambodia’s national currency, the riel, which is part of the country’s dual currency system alongside the US dollar. However, the digital money project alone will not be able to convert Cambodia from a US dollar-based economy to the riel, she added.

“There are other policies that need to be put in place, such as a stable exchange rate and inflation rate,” Serey said, concluding that Bakong’s mission is to “increase the use of local currency” for the long term Local currency “to be used exclusively”. According to the Wall Street Journal, the US dollar is currently used for 90% of financial transactions in Cambodia.

Related: France and Singapore are piloting cross-border CBDC transactions

In addition, the NBC general manager expressed a skeptical stance towards Bitcoin (BTC), the world’s most valuable cryptocurrency. Serey said the crypto industry needs regulatory and consumer protection to avoid the consequences of volatile prices, stating, “There are no fundamentals and if you allowed investors to get involved, who will be responsible when the price goes up crashes? ? “

Developed by NBC in partnership with Japanese blockchain technology company Soramitsu, Bakong enables Cambodian citizens to pay in stores or send money via a mobile app to support billing and transfers in Riel or US dollars. At the start of the project, Serey emphasized that Bakong should be referred to as a payment and money transfer service rather than a CBDC.