Cambodia sets up a payment infrastructure on Blockchain

The National Bank of Cambodia has announced the creation of a blockchain-based MNBC digital currency platform. The infrastructure, dubbed Bakong, is primarily aimed at facilitating mobile payments and money transfers, under a tokenized version of the dollar and riel, the local currency. Bakong also ensures interoperability between the country's various payment players.

FACTS

• The launch of Bakong opens up a state-developed platform for Cambodians to make instant mobile payments, with QR codes and phone numbers linking digital wallets via a blockchain.

• The Bakong platform is hosted by the Hyperledger Iroha blockchain designed by Japanese company Soramitsu.

• Bakong is the only live central bank blockchain payment project outside of the Bahamas Sand Dollar, another MNBC.

• For the first half of 2021, Bakong has recorded a total of 1.4 million transactions, worth $500 million.

CHALLENGES

• Cambodia sees Bakong as a crucial step in modernizing its payment system. From its inception, one of the main reasons for launching Bakong was to promote financial inclusion. As much as 78% of the population is unbanked.

• Bakong's other key objective is to de-dollarize the Cambodian economy: controlling the money supply would allow the central bank to lower interest rates and create money.

MARKET PERSPECTIVE

• Meanwhile, other countries have stepped up the pace of their CBDC research, with India and Nigeria hoping to test their MNBCs soon.

• Last month, the ECB announced the launch of a concrete study phase of its digital euro project. and the governor of the Central Bank of Ireland also wrote last month about the promise of a digital euro, saying it was a matter of "when" not "if."