The Cambodian government has spared no effort in the development of digital currency. After its digital currency Bakong is launched in 2020, it will not only receive support from the domestic banking community. This year, it has attracted the attention of countries such as Japan and Malaysia. Cambodia’s digital currency will also become more and more influential in the international arena.
Cambodia Pioneer in the investment of national digital currency
In recent years, because of blockchain technology, it has broken through the dilemma of currency encryption technology and strengthened the development of national digital currency. According to a report by PWC, a world-renowned accounting firm, the Bahamas, China and Cambodia are the three countries with the best retail digital currency development.
The Central Bank of Cambodia chose to cooperate with the Japanese company Soramitsu to use the blockchain technology developed by the company to create the Bakong platform. Unlike other countries that are still in the development stage, Cambodia will launch its own digital currency system in 2020. Cambodians can use Bakong to make online transfers in riel or U.S. dollars.
As of June 2021, the number of Bakong users has increased by 200,000 from March, with a growth rate of over 100%, and the total number of users has reached 5.9 million. In terms of transaction volume, it also has outstanding performance. From January to June this year, the total transaction amount reached 500 million US dollars, and a total of 1.4 million transactions were transacted.
Bakong attracts the attention of Japanese and Malaysian companies
Because Cambodia’s digital currency is at the forefront of the world and is already in operation, its business opportunities have attracted the attention of Japanese and Malaysian companies. Bakong platform was developed by Japanese company Soramitsu, so it was the first to arouse Japanese companies’ interest in Bakong. Renet Group, Soramitsu Holdings (HD) and Japan International Cooperation Agency (JICA) have cooperated with three companies to jointly promote the Bakong digital currency issued by the Bank of Cambodia in Japan. Bakong successfully set off a whirlwind in the Japanese financial circle, hoping to have the opportunity to be widely accepted in Japan in the future.
A few days ago, the Central Bank of Cambodia also announced the cooperation with Maybank, Malaysia’s largest private commercial bank, to launch the instant cross-border remittance service of Bakong and Maybank app-MAE. As long as the recipient has registered Bakong with his mobile phone number, customers of Maybank Malaysia can use the MAE program to send money and the recipient’s mobile phone number to send the money to the other party’s Bakong e-wallet. The maximum remittance amount can reach US$2500.
A weapon to promote Cambodia’s monetary and financial policies
For a long time, the U.S. dollar has been the most circulating currency in Cambodia, and almost 90% of transactions use U.S. dollars. Although the popularity of the U.S. dollar is one of the incentives to attract foreign investment, it is not conducive to Cambodia’s monetary policy. Therefore, how to increase the use rate of the country’s currency, the riel, has become a problem that the Cambodian government must overcome. The lack of financial infrastructure is one of the reasons why Riel cannot be popularized.
With a young population in Cambodia, more and more people are familiar with the use of technology products, coupled with the popularization of mobile devices such as mobile phones, are very suitable for the promotion of digital currencies. Digital currency can even make up for the lack of financing infrastructure. This is why the Central Bank of Cambodia decided to develop Bakong to increase the utilization rate of the riel and gradually bring back the national currency dominance.
In addition to currency dominance, Bakong’s cashless payment and its convenience help economic and financial progress. It can also avoid contact and prevent the spread of the epidemic when the epidemic is raging.
Maintain digital currency leadership and avoid crowding out
Although Bakong has developed successfully, central bank digital currency is a global trend. Neighboring countries such as China, Thailand, and Vietnam are also betting on the development of their own digital currencies. The current economic development of Cambodia is not as good as that of Thailand and Vietnam. If Bakong’s layout in Southeast Asia, even all of Asia, and the world is not stepped up, it is likely to be squeezed out by Thailand and Vietnam and lose its original function. Therefore, even if Cambodia’s Bakong has achieved a leading position in the world, it must not be taken lightly to maximize Bakong’s influence and achieve the best interests of the country.