On May 28, Central Bank Governor Chea Serey highlighted the potential of Bakong, Cambodia’s own Central Bank Digital Currency (CBDC), to enable cross-border QR payments and promote the use of the Cambodian Riel (KHR).
USD, Riel, and now a CBDC
Speaking at the Nikkei’s Future of Asia event in Tokyo, Serey described Cambodia’s unique currency system, which heavily relies on the U.S. dollar, both in the national economy and on individual level.
She noted that over 80% of the country’s economy operates on a two-tiered system dominated by the dollar, while the government seeks to expand the Riel’s usage for everyday transactions.
Since its introduction in 2020, the Bakong CBDC has enabled $70 billion in digital payments as of 2023, a figure that nearly doubles Cambodia’s GDP.
Domestic transactions using Bakong can be done in both Riel and the U.S. dollar, with Riel transactions amounting to $20 billion last year, more than twice the value recorded in 2022.
International business
Governor Serey stressed that cross-border transactions are very important to increasing the Riel’s usage, as Bakong facilitates QR code payments between Cambodia and countries such as Thailand, Laos, Vietnam, and China through UnionPay.
These international transactions are restricted to using Riel, requiring Cambodian customers to open Riel Bakong accounts to transact with these countries.
This bring some disadvantages too, for example Thai tourists cannot use QR code payments unless the merchant accepts the Cambodian Riel.
Bakong is distinguished from other CBDCs by its dual backing of the Cambodian Riel and the U.S. dollar, which ensures stability and broader applicability within Cambodia’s bi-currency framework. This dual support facilitates large transactions and streamlines integration processes.
Governor Serey also announced plans to enable cross-border payments using Bakong with India by June 2024 and is exploring potential collaborations with Japan.
“We are open to working with other countries with significant people movement with Cambodia.”
New technologies to apply
She added that leveraging technology from more advanced countries, such as Japan, would strenghten the Bakong payment system through the integration of new technologies.
The significance of these developments lies in the potential to strengthen Cambodia’s economy by increasing the use of its local currency, the Riel.
If successful, this could reduce the country’s dependency on the U.S. dollar, stabilize its financial system, and set a precedent for other nations exploring digital currencies.
