Some 7.9 million people out of Cambodia’s 16.7 million population currently use Bakong, the national digital currency. It was launched in October 2020 and was one of the first CBDCs. By November last year, there were 6.8 million transactions worth about $2.9 billion (~£2.2 billion).
Bakong, a nationwide blockchain-based payment system from the National Bank of Cambodia, was officially launched in October 2020. It became one of the first central bank digital currencies (CBDC). All financial transactions associated with Bakong are handled through a mobile app. Residents don’t need a bank account to register with it. A local mobile phone number is enough.
In November of last year, the Bakong app had about 270,000 users, according to the central bank. Around 7.9 million individuals began using the digital money after partnering with local institutions. This accounts for over half of the country’s 16.7 million people. 6.8 million transactions totaling $2.9 billion were completed by November 2021.
Chea Serey, director general at Nation Bank of Cambodia, said, “Bakong allows interoperability between different players in the financial system, making digital payment easier and more efficient”. He said the digital currency creates social cohesion, bridging the gap between rural and urban areas. This is especially true for migrant workers and students who leave the villages for the city and need financial support from their families at the beginning.
Cambodia is classified as a “least developed country” by the United Nations. According to the World Bank, only 22% of adults had bank and mobile accounts in 2017, compared with 70% in East Asia and the Pacific. This was one of the main reasons pushing the central bank to develop a digital currency.
Promoting Bakong, the National Bank of Cambodia is actively cooperating with foreign financial institutions. In August 2021, it partnered with Malayan Banking, a Malaysian commercial bank, to conduct cross-border money transfers. This made it possible for Cambodians working in Malaysia to send money quickly to their families.
The successful launch of Bakong has heightened the attention of other central banks to next-generation currency systems. As reported by Nikkei Asia, a survey conducted early last year found that 86% of 65 central banks were actively involved in some form of CBDC development. Almost 60% intend to launch their own digital currencies within six years.
A few hours ago it became known that Cambodia’s digital currency was one of the winners of the Nikkei Superior Products and Services Awards 2021. Such an award is given for innovative technology and its impact on the country’s economic and social development.
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
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