Cambodia creates central bank digital currency
The National Bank of Cambodia (NBC) is preparing to launch a central bank digital currency (CBDC) at some point during the current fiscal quarter.
Chea Serey, NBC's director-general, said that the central bank was developing "the national payment gateway for Cambodia" as a blockchain-based, peer-to-peer platform with its own specially designed cryptocurrency.
The project has long been known as "Project Bakong" and was first trialed by NBC in July of last year. The CBDC will work on a closed system supported by its banking members, with one of them being the Phnom Penh Commercial Bank (PPC Bank).
Shin Chang Moo, president of the PPC Bank, said that his bank is planning to roll out the system across all branches, as it is cheaper and more convenient. He said:
We are in the final stages of the deployment. It has taken a little longer than expected because we were ensuring that the system is as useful and convenient for the users as possible. We will offer the service as soon as it launches.
He also added that when using the CBDC, there is "zero possibility of speculation," as users will be able to set up a Bakong wallet that will be automatically linked to their bank accounts, allowing a real time fiat currency exchange into the new CBDC. The CBDC will store all transaction data from the platform, making payments fully traceable. The "quasi-form" CBDC may be used for everyday payments from any mobile device.
The CBDC was designed by Japanese blockchain company Soramitsu. CEO Makoto Takemiya said that Project Bakong "is simply a tokenized version of the USD and Riel fiat money in NBC's reserves." He added:
The system can support any type and number of currencies, including cryptocurrency.
Although Cambodian authorities in Cambodia announced in June of 2018 that domestic investors were required to obtain a license in order to purchase, sell or trade cryptocurrencies, suggesting that such activities “would cause potential risks to the publics and society as a whole,” the NBC had been testing blockchain technology for an interbank payment solution since 2017.
In October of last year, the bank signed an agreement with Malaysian bank Maybank, in order to begin experimenting with digital wallets for cross-border transactions.
Bakong already has the support of 11 national banks, with others expected to join soon, according to Serey. He said:
Bakong will play a central role in bringing all players in the payment space in Cambodia under the same platform, making it easy for end-users to pay each other regardless of the institutions they bank with.
In Australia, the Reserve Bank of Australia's recent submissions to the Senate Select Committee on Fintech and Regtech confirmed that the RBA is also actively experimenting with wholesale alternatives on a private Ethereum network. The Australian Financial Review (AFR) recently praised these experiments and endorsed the ongoing journey towards an Australian digital dollar.