With Central Banks across Asia are racing to develop their own central bank digital currencies (CBDCs), it is often China that gets all the glory. With its advanced pilot schemes and widespread trials, casual observers could be forgiven for thinking China is leading the way.
In reality, it is its smaller regional neighbor, Cambodia, that has pulled out in front of the 60-plus central banks working on CBDCs. For Cambodia, the incentive is there from more than just a technological standpoint—the country is determined to break the dollarization of its economy which sees the US dollar circulate widely through the local economy, as well as its own currency, the riel.
Cambodia is only the second country anywhere in the world to have launched a central bank digital currency, with its Bakong currency going live in October 2020. Developed by the National Bank of Cambodia in partnership with Japanese blockchain company Soramitsu, the project was originally seen as a way of uniting the disjointed payment systems in the country.
Chea Serey, general director of the NBC and the project lead, said that the original intention was to deliver better systems for Cambodia.
“Bakong started sort of as a willingness to connect up the fragmented payment systems in Cambodia.”
Today, the system reaches some 5.9 million users, with some $500 million in transaction volumes passed through the currency in 2021 alone.
Describing the jump in user numbers as “quite satisfying to see,” Serey said the pandemic had also given more impetus to users to adopt more digital payments and systems. “The circumstance was ripe for people to switch to using a more digital medium.”
While Serey noted the dollar had been beneficial to the Cambodian economy in the past, the hope now is that the shift to the Bakong will help end this reliance on the dollar, while boosting economic growth within Cambodia.