Cambodia is poised to become the next country to launch a central bank digital currency (CBDC), as the country gears up to roll out new payment infrastructure over the coming months.
Project Bakong will deploy blockchain-powered technology across Cambodia’s payment networks, and will feature a CBDC designed specifically for use on the platform.
The project has quickly secured backing from 11 of the 48 commercial banks in Cambodia, with more thought to be investigating whether to get behind the rollout, the Phnom Penh Post reported.
According to Chea Serey, director-general of the National Bank of Cambodia (NBC), there is an expectation that more banks will come on board once the project has been launched and is operational.
Serey said the technology would bring together all Cambodia’s payment businesses on a central platform, as well as eventually powering cross-border payments through the system: “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. Eventually, we hope to allow cross border payment through the Bakong system too.”
The CBDC will be centrally controlled by the National Bank of Cambodia, and available on a closed network shared between a number of banks and other financial institutions.
The project has been trialed extensively since July 2019, with the launch slated for before the end of March 2020.
Project Bakong will roll out in Cambodia despite cryptocurrencies remaining illegal. The Cambodian central bank has previously issued investors with warnings about the risks of speculating on cryptocurrencies, as well as the high levels of fraud and criminality around the sector.
Yet the move towards a CBDC is a recognition from the central bank of the power of blockchain for payments, and could pave the way for more efficient, cost-effective payments in the country.
The announcement comes at a time of increasing interest in central bank digital currencies. Central banks worldwide are known to be exploring the technology, including in China, the U.K., the E.U., the U.S., Canada, and most recently Japan.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
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