Cambodia Central Bank Chief Sees Digital Currency Boosting Fiat Use

Central Bank Governor Chea Serey said on May 28 that Bakong, the Cambodian Central Bank Digital Currency, could promote cross-border QR payments, which would increase the use of the Cambodian Riel (KHR). Interviewed at the Nikkei’s Future of Asia event in Tokyo, Serey said that Cambodia’s currency system is far from conventional. 

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During the interview, she said that over 80% of the country’s economy is still dominated by the U.S. dollars in a two-tiered money system. According to Serey, the government aims to extend the use of Riel for daily transactions.

At the occasion of the Nikkei Forum 29th Future of Asia, Secretary-General of ASEAN, Dr Kao Kim Hourn, met with the Governor of the National Bank of Cambodia (NBC), Dr Chea Serey.

They discussed the significant progress made in ASEAN digital payments integration, financial… pic.twitter.com/pmy8pQ0ybk

— ASEAN (@ASEAN) May 24, 2024

Since its launch in 2020, the Bakong CBDC has facilitated $70 billion in digital payments as of 2023, a figure that’s nearly double Cambodia’s GDP. Domestic transactions through the Bakong can be conducted in both Riel and the U.S. dollar, with the former accounting for $20 billion of last year’s total, which is more than twice the value from 2022.

Serey Advocates Cross-Border Transactions To Boost Riel Use

According to the Central Bank Governor, the aim of cross-border transactions is crucial to popularising the use of the Riel. A notable one is that Bakong is used for payment through a QR code between Cambodia and other countries like Thailand, Laos, and Vietnam, as well as for UnionPay of China.

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These international transfers are limited to using Riel only, which means customers from Cambodia are mandated to open Riel Bakong accounts to transact with those countries. For example, Thai tourists cannot purchase goods through QR code payment if the merchant does not accept Cambodia’s Riel.

The Bakong stands out from other CBDCs because the Cambodian Riel and the U.S. dollar back it. Such dual backing ensures stability and generates more extensive applicability within the bi-currency context of the Kingdom of Cambodia to perform large transactions and refine the process of integration.

Cambodia To Enable Bakong Cross-Border Payments

Governor Serey revealed plans to launch cross-border payments using Bakong CBDC with India by June 2024. The central bank is also exploring potential collaboration with Japan. She said: “We are open to working with other countries with significant people movement with Cambodia.”

She said that using assistance and access to technology from other technologically developed countries, such as Japan, would improve the Bakong payment system by integrating appropriate technologies.

In March 2024, Hong Kong’s central bank launched a wholesale CBDC to strengthen the city’s financial system. Additionally, the South Korean central bank plans to test the digital Korean Won (KRW) by late 2024 to evaluate its usability and deposit function.

Cryptopolitan reporting from Damilola Lawrence