Cambodia’s central bank has emphasised the crucial role of the Bakong payment system in advancing financial inclusion among the unbanked population, particularly in fostering the development of a Central Bank Digital Currency (CBDC).
Chea Serey, governor of the National Bank of Cambodia (NBC), expressed interest in digital currency while addressing the “Central Bank Digital Currency: Emerging Good Practices” conference. The November 14 event was organised by the International Monetary Fund’s (IMF) Singapore Regional Training Institute (STI) in Singapore.
The NBC has been actively exploring the concept of a digital currency since 2016 and introduced Bakong in 2020, which shares many features with a CBDC.
“I would like to take this opportunity to discuss some practical aspects of developing the Bakong payment system. Firstly, Bakong promotes interoperability and connectivity across various financial institutions in the country,” she said.
“Secondly, it enhances the efficiency of payments in terms of cost, transparency and security. Thus, the [network] facilitates financial inclusion among the unbanked population and, importantly, encourages the use of local currency in electronic payments.
In the early stages, the NBC assessed its foundational readiness in terms of resources and technical capacity while reviewing relevant regulatory frameworks,” she added.
Serey explained that the platform has two main features: the backbone feature allows real-time transactions across institutions, while the extended feature enables peer-to-peer transactions between end-users.
The project moved from proof of concept to prototype development by 2019. The pilot phase was officially launched in late 2020.
She noted that the country remains vigilant about the implications of the system on key policies such as financial inclusion, monetary policy and financial stability.
Kristalina Georgieva, managing director of the IMF, said in her opening remarks that over 110 of IMF’s members are engaged in CBDCs at various stages – some are quite advanced, while others are still exploring.
“For us, the institute is not only a place to teach about CBDCs but also to understand their dynamics and identify the critical questions we at the IMF need to help answer,” she said.
Igor Zimarev, chief marketing and corporate social responsibility (CSR) officer at ABA Bank, stated in late October that ABA was among the first institutions to introduce Bakong-centric services to its clientele, which were implemented in August 2020.
In the first nine months of 2023 alone, ABA facilitated a staggering 579 million transactions via its mobile banking app, amounting to a transaction value exceeding $154 billion.
“The push towards digitalisation in the banking and financial sectors, both domestically and globally, has been underway for nearly a decade. The advent of Covid-19 merely expedited this shift towards digital finances,” he said.
“Cambodia, with its youthful demographic, proactive government initiatives and the inception of Bakong, has seen tremendous progression in this arena,” he added.
According to Serey, the platform recently reached hundreds of millions of customers and handled a total of 63 million transactions. Between 2021 and 2022, the value and number of transactions by the network increased by 400% and 300%, respectively, totaling $15.4 billion.
“We are soon introducing a more integrated [product], which will support this rapid development and enhance user friendliness, enabling cross-border transactions. The new platform aligns with the government’s initiative on the digital economy and society framework,” she stated.
“I hope the NBC’s journey in developing the Bakong system has offered insights into the future development of a CBDC,” she added.