Central Bank Governor Chea Serey’s recent revelations concerning Cambodia’s Central Bank Digital Currency (CBDC), Bakong, underscore a pivotal shift in the country’s monetary landscape. Serey, speaking at the Nikkei Future of Asia conference, elucidated how Bakong could catalyze the adoption of Cambodia’s Riel currency, particularly through cross-border QR payments.
Cambodia’s economy, despite significant strides, grapples with a dual-currency system, with the U.S. dollar still dominating over 80% of transactions. Yet, Serey highlighted a notable trend: while physical transactions lean towards the dollar, digital transactions favor the local currency, Riel.
Bakong’s ascendance in facilitating digital payments since its inception in 2020 has been meteoric. The CBDC has orchestrated a staggering $70 billion in transactions by 2023, a figure dwarfing the nation’s GDP. Of this, domestic transactions surged, with Riel accounting for a substantial $20 billion, emblematic of its growing prominence.
Central to Bakong’s efficacy is its role in cross-border transactions, a realm where it not only facilitates seamless payments but also amplifies the utilization of the Riel. The CBDC’s functionality extends beyond national borders, enabling QR code-based transactions with neighboring countries like Thailand, Laos, Vietnam, and China through UnionPay. Notably, these cross-border transactions are exclusively denominated in Riel, accentuating its indispensability.
Distinguishing Bakong from its counterparts is its dual backing by both the Riel and the U.S. dollar, a configuration that fortifies its stability and utility within Cambodia’s intricate monetary framework. This duality ensures smoother transactions and enhances financial integration, rendering Bakong a linchpin in Cambodia’s economic ecosystem.
Cambodia’s endeavors mirror a global trend, with other nations exploring CBDC initiatives to fortify their fiat currencies. Hong Kong’s recent foray into wholesale CBDC and South Korea’s impending pilot of the digital Korean won underscore the pervasive allure of digital currencies in bolstering financial robustness.
Looking ahead, Cambodia’s Central Bank eyes ambitious cross-border ventures with India and Japan, signaling a concerted effort to expand Bakong’s footprint. Collaboration with technologically advanced nations like Japan holds promise, offering avenues for enhancing Bakong’s functionality and bolstering the appeal of the Riel on the global stage.
In sum, Chea Serey’s elucidation underscores Bakong’s transformative potential in reshaping Cambodia’s monetary landscape. As the nation embarks on cross-border collaborations and embraces digital innovation, Bakong emerges as a harbinger of financial inclusivity and economic resilience in the digital age.
