The National Bank of Cambodia is readying a Central Bank Digital Currency (CBDC) to launch at some point during the current fiscal quarter. The new digital currency is called Bakong. It’s effectively a CBDC that was earlier launched on a trial basis throughout Cambodia in July 2019. The director-general of the National Bank of Cambodia, Chea Serey says the system will be operational any time within the present fiscal quarter. Serey also described Bakong as the national payment gateway for Cambodia.

According to the Director-General

Bakong will play a central role in bringing all players in the payment space in Cambodia under the same platform. Thus, it will make 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.

How Does the Digital Currency Will Operate?

It’s entirely a blockchain-based peer-to-peer platform with its own specially designed cryptocurrency. The project Bakong will first work on a closed system supported by its banking members. One of them is Phnom Penh Commercial bank. The President of Phnom Penh Commercial Bank, Shin Chang Moo says Bakong is cheaper and more convenient when comparing to conventional payment and transfer methods including credit and debit cards.

Moreover, a software wallet is linked to each user’s bank account for them to more easily interact with hard currency. The system supports real-time transactions while the National Bank of Cambodia stores centralized records about where the money goes.

This is a bit of an adjustment to Cambodia’s previous heading on cryptocurrency and blockchain technology. The country had previously issued requirements for a cryptocurrency business license. Therefore, a Cambodian crypto exchange became the first such licensed business in August 2018.

What NBC Has to Say Regarding Bakong?

When asked more about Bakong, NBC says users will use the “quasi-form” for everyday payments from their mobile devices. The initiative will support the govt’s push to introduce QR-based transactions throughout the country. The Japanese blockchain company, Soramitsu, designs Bakong. CEO Makoto Takemiya of the company says CBDC is simply a tokenized version of the USD and Riel fiat money in NBC’s reserves. Soramitsu is currently working on implementing similar systems for other countries around the world.

Although Cambodian authorities have cracked down on cryptocurrency trading, NBC had been testing blockchain technology for an interbank payment solution since at least 2017. In October, the bank signed an agreement with a Malaysian bank to begin experimenting with digital wallets for cross-border transactions.

Bakong already has the support of 11 national banks, with others expected to join soon. Undoubtedly launch of Bakong will create financially inclusive ecosystems that all the stakeholders in the industry can benefit from. Says Serey.