The National bank of Cambodia prepares central bank digital currency based on blockchain technology dubbed ‘Project Bakong’. The project will be released within the next couple of months. The project already has the support of 11 banks, and many more are expected to join soon.
31 January, 2020 | AtoZ Markets – Chea Serey, general manager of NBC, told this week that the central bank is developing “the national payment gateway to Cambodia” known as the “Project Bakong.” It is a blockchain-based peer-to-peer platform with its own specially designed cryptocurrency. She has not given a precise date of the CBDC’s launch.
Project Bakong Is a Quasi Form of CBDC
The project essentially a quasi-form of central bank digital currency (CBDC), and first tested by NBC in July 2019. Moreover, the CBDC will work on a closed system supported by its banking members, told one of them, Phnom Penh Commercial Bank, President Shin Chang Moo.
Initially designed for national payments in Cambodia, NBC plans to integrate a cross-border payment system into the Bakong platform, Serey said.
According to Serey, Bakong already has the support of 11 national banks, while others expect to join soon. “Bakong will play a vital role in bringing all the users in the payment space to Cambodia under the same platform. It will be easy for end-users to pay each other regardless of the institutions they make payments with,” said Serey.
Compared to traditional payment and transfer methods, including credit and debit cards, Bakong is cheaper and more convenient, Chang Moo said. His bank is implementing the system in all branches. He said:
We are in the final stages of implementation. It took a little longer because we made sure that the system was as useful and convenient as possible for users.
He also clarified that digital currency would not be a threat to traditional banking business. Besides, highly centralized currency will also eliminate the possibility of speculation, which is very common with digital currencies.
Cambodia Prepares Central Bank Digital Currency Testing Digital Wallet
Users can easily set up a Bakong wallet. The wallet will automatically link to their bank accounts, allowing for secure exchange of fiat currency in the new CBDC in real-time. NBC says the wallet will store all transaction data from the platform and suggest that payments can be fully traceable.
Chang Moo said Bakong would help establish a national standard for the use of the QR code, which will be integrated with ASEAN equivalents.
The Japanese company Soramitsu designed Bakong. CEO Makoto Takemiya told that CBDC “is simply a popular version of the fiat USD and Riel money in NBC’s reserves.”
“The system can support any type and number of currencies, including cryptocurrency,” he added. Soramitsu is also currently working on the implementation of similar systems for other countries in the world.
This could affect the banking sector in the short term. Cambodia’s financial system is “relatively immature,” according to Chang Moo. However, Bakong will create financially comprehensive ecosystems that all stakeholders in the sector will benefit from.
Cambodian governments have cracked down on cryptocurrency trading. But NBC has been testing blockchain technology for an interbank payment solution since at least 2017. However, in October, the bank signed an agreement with a Malaysian bank. The agreement was to start experimenting with the digital wallets for cross-border transactions.
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