Cambodia’s central bank is working to expand the use of its central bank digital currency (CBDC), with the ultimate goal of removing the country’s reliance on the US dollar.
Bakong Project to End USD Dependence
Chea Serey, director-general of the National Bank of Cambodia (NBC), told Nikkei Asia that the number of users on Project Bakong has increased exponentially. According to the NBC director-general, the COVID-19 pandemic was a major factor in the adoption of digital payments.
Cambodia’s government first announced plans to launch a digital currency in July 2020. By October, the NBC had launched Bakong in collaboration with other commercial banks and the Japanese technology firm Soramitsu Co, which had developed the underlying blockchain architecture.
By June 2021, the number of Bakong electronic wallet users had risen to 200,000, more than doubling the number of users registered in March. In addition, the first half of 2021 saw 1.4 million transactions worth $500 million, with the CBDC’s system reaching nearly 6 million users.
The Cambodian CBDC project was created to eventually end the hegemony of the US dollar in the country by encouraging the widespread use of the riel. The NBC director-general, however, stated that simply having the Bakong would not be enough to displace the USD from the Cambodian economy. According to Serey, “a stable exchange rate and inflation rate, as well as economic growth prospects,” are required.
Aside from plans to challenge the hegemony of the US dollar in the country, the central bank wants to use the Bakong for cross-border settlements. According to the NBC executive, such use of the Bakong would allow Cambodian women working abroad to safely and effectively send money home to their families.
The Bakong is the Bahamas’ second CBDC to be used on a national scale, following the Sand Dollar. Meanwhile, more countries are investigating and issuing digital currencies. According to BTCManager, the Central Bank of Nigeria (CBN) announced in July that it planned to launch its digital naira pilot program later in October.
In contrast, South Korea’s central bank chose Ground X as its technology partner for its digital won project. Meanwhile, China maintains its lead with extensive digital yuan trials in various parts of the country.