Cambodia’s new state-backed crypto money meets strong response
08 August, 2021
Cambodia’s central bank-backed crypto currency rollout, which started as an experiment in October last year, has so far met strong response among the population and could possibly diminish the role of the US-dollar in favor of the national money, the riel, in the country’s double-currency economy.
The crypto money called “Bakong” is backed by the riel as fiat money, based on blockchain technology and can be used with a mobile app installed on a smartphone, which has been generally welcomed by Cambodians, many of which don’t have bank accounts.
Integrated in countrywide payment solutions
The Bakong has been designed to work seamlessly with Cambodia’s legacy payment solutions of major banks and has meanwhile been adopted by 18 financial institutions. Since it is backed by the central bank, the virtual money can be regulated and is giving back the country some of its monetary sovereignty.
Since last October, about 5.9 million of Cambodia’s 16.7 million population have signed up for the Bakong app, and the Covid-19 pandemic has fueled its adoption even further as contactless digital payments got a boost. During the first half of 2021, Bakong users conducted around 1.4 million transactions amounting to $500 million, official data shows.
Potential backbone for nationwide payment infrastructure and exports
While the Bakong system currently allows transactions in both the riel and the US dollar, the use of the riel is expected to increase to a point where it would possibly become the new backbone of Cambodia’s payments and settlement infrastructure, Chea Serey, director general of the National Bank of Cambodia, commented.
The new system is also an attempt by the government to transform the cash-intensive economy towards the adoption of digital payments and also reduce dependence on foreign currencies.
As a next step, Cambodia’s central bank is exploring cross-border transactions using the Bakong and is currently working on this with Malaysia’s Maybank, as well as Thailand’s central bank.
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