A recent media report indicates that Cambodia’s central bank is just months away from launching a digital currency. The project is going to be called “Project Bakong.”
According to the bank’s director-general, this plan has already received the support of 11 banks operating in Cambodia. He added that he expected more banks to sign up to the project soon.
Trial Run
According to the report, a trial run of the Bakong was already launched in July 2019. The goal is to have it operational in Q1 2020. The bank’s director-general described it as the national payment gateway for the nation.
According to her, Bakong is going to bring all stakeholders in the financial ecosystem of Cambodia under one roof. The result is that users will be able to transact with each other no matter which bank they use. She added that she eventually hopes to use the Bakong in cross-border payments.
Banks Already Embracing It
The president of Phnom Penh Commercial Bank, Shin Chang Moo, said that the bank planned to deploy the Bakong in all its branches. He said that the bank was in the final stages of deployment. He, however, noted that it had taken longer than they had planned originally. This is because they were conducting tests to ensure that it was convenient for all its customers. According to the bank’s president, this system had the advantage of being cheaper. It was especially so when compared to other payment options such as mobile, debit, and credit cards.
However, there has been concern that banks could lose their market share to the Bakong. This is likely to be true in the short term. Despite this, the financial sector of Cambodia is still quite young in terms of the service providers and the number of users. The Bakong will create financial inclusivity that will benefit all stakeholders in the industry, according to one financial expert.
Centralized Governance
Just as China plans to launch a centralized digital currency, the Bakong is going to be centralized. It will be a closed system that will be closely monitored by banking regulators. The report also indicates that the Bakong wallet will be directly linked to a user’s bank account. They will then be able to change their hard currency for the Bakong. All transactions will occur in real-time and the records will be securely stored by the Cambodian central bank, which is known as the National Bank of Cambodia (NBC).
According to Chang Moo, the Bakong is going to play a critical role in the creation of a national standard for using QR codes, which can be integrated with others in the ASEAN region. He added that with the launch of Cambodia’s central bank digital currency, it would encourage others to launch similar projects.
In the recent past, central banks have been looking into digital currencies. Thus far, none has launched a digital currency. However, 2020 could be the year of central bank digital currencies.
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