Cambodia has certainly gained a lot of accolades for its central bank digital currency (CBCD).
By launching one of the world’s first CBCDs, Cambodia initiated an experiment that is being watched closely worldwide. The Cambodian government has undoubtedly shown a willingness to take risks in pursuit of innovation.
Cambodia’s Bakong is Making Waves
Known as Bakong, Cambodia’s new digital payment system is based on blockchain technology.
This is the same secure technology helping lift Bitcoin prices to new heights. Bakong allows just about anyone to perform essential transactions on their phones.
This process is powered by the Bakong smartphone app, a user-friendly tool for money storage and transfer. Reviewers have given this app fairly good press.
Though Bakong is not without its detractors, this CBCD has earned high marks from quite a few digital currency, like crypto, experts. Nikkei is one financial publication that has given Bakong plenty of praise.
Working Towards Financial and Social Stability
Amazingly, Bakong has now reached almost half of Cambodia’s population. In a developing nation like Cambodia, this level of use represents a massive success.
Bakong provides interoperability to different financial stakeholders that might otherwise remain atomized. Beyond providing financial benefits, Bakong contributes to Cambodia’s social cohesion.
Reportedly, this unifying currency is bridging the gap between rural and urban citizens.
Cambodian rural workers and students often travel to the city to seek greater opportunities.
Thanks to Bakong, it is easier for these internal migrants to maintain financial connections with relatives. Bakong has helped Cambodia realize improvement in several key economic indicators.
How Digital Currency is Improving Cambodia’s International Reputation
Due to Cambodia’s historical challenges, the United Nations has dubbed this nation a “least developed country.” However, Cambodia has made great strides in recent years.
As recently as 2017, only 22 percent of Cambodians used banks or mobile payment technology. Bakong has greatly improved Cambodia’s reputation on the international scene. In turn, Cambodia may well see increased investment in the years ahead.
To bring Bakong into reality, Cambodia worked with Japanese blockchain company Soramitsu. This type of international cooperation provides a useful model for other nations to scrutinize.
When developing Bakong, Cambodia naturally had domestic uses foremost in mind. Nevertheless, the Bakong project has involved a number of foreign financial institutions. For example, Cambodia has partnered with a major Malaysian bank to facilitate Bakong-powered remittances.
How Bakong Empowers Migrant Laborers
Since Cambodian migrants often work in Malaysia, Bakong should help both nations achieve their economic potential.
In a variety of ways, Bakong can help Cambodian workers have greater control over their personal finances. Instead of simply sending sums home, Bakong allows migrants make direct payments to service providers.
With Bakong, workers in Malaysia can easily pay school tuition and utility bills back home. The Cambodian national bank is hoping that Bakong will encourage the use of the Cambodian riel.
Though the riel is legal tender, Cambodia also uses U.S. dollars. Increased riel use can help Cambodia achieve greater control over its financial destiny.
