The market for Central Bank Digital Currencies (CBDCs) is heated up at the moment with most of the banks around the world either piloting a CBDC project or researching its use cases. Ever since China made the news with its state-backed cryptocurrency, others have followed.
Cambodia joins the race
Over the last few months, multiple reports have surfaced about national cryptocurrencies being developed and researched. Fresh on the list is The National Bank of Cambodia.
The nation is set to launch a Blockchain-based, peer-to-peer payment and money transfer platform dubbed “Bakong” in the next few months, its director-general Chea Serey told The Post on Monday. Bakong is a CBDC that was first launched in July on a trial basis throughout Cambodia.
According to Serey, the digital currency will function as the “national payment gateway” for Cambodia with support seen from 11 banks already. She said:
“Bakong will play a central role in bringing all players in the payment space in Cambodia under the same platform, making it easy for end-users to pay each other regardless of the institutions they bank with.”
Phnom Penh Commercial Bank is one of the banks that is set to deploy Bakong, the bank’s president Shin Chang Moo said:
“The Bakong wallet is currently linked to users’ bank accounts to exchange with hard currency. All the transactions will be done on a real-time basis with the records stored safely at NBC.”
Users will be able to use the “quasi-form” CBDC for everyday payments via their mobile devices. The initiative is expected to support the government’s push to introduce QR-based transactions throughout the country. The system supports real-time transactions while the National Bank of Cambodia holds a centralized record about where the money goes. The digital currency will initially be launched for domestic use, but the nation has plans to integrate cross-border payments facility into the platform.
The Hype is real
A lot has been happening over the past year in the CBDC space. Earlier this month, the Bank of England (BOE) announced it would be exploring the use-case of a Central Bank Digital Currency with the Bank of Canada, the Bank of Japan, the European Central Bank, the Sveriges Riksbank of Sweden, and the Swiss National Bank.
The group will work together with the Bank for International Settlements (BIS) to assess the various use cases and implications of utilizing a CBDC. Furthermore, it will also look into practical and technical design choices, cross-border interoperability, and the distribution of info on emergent technologies.
The news about Bakong follows a survey conducted by BIS with 66 central banks from around the world. The survey highlights the rising CBDC trend as 80% of all participants is in the process of creating their own central bank digital currency. There has been a 10% rise since last year and 40% have already progressed from conceptual research to experiments, and 10% have developed pilot projects.
Apart from Cambodia, other nations are quickly gearing up for a digital showdown as many nations are developing their CBDC. China is currently the closest to launching their national cryptocurrency dubbed the Digital Currency/ Electronic Payments System (DCEP). Also on the list of nations developing their own cryptocurrency are Turkey, the European Union, and Iran.