The National Bank of Cambodia is preparing to launch a new central bank digital currency (CBDC) called Bakong. The bank had started testing the currency in July 2019. Now it expects to launch the currency in the next few weeks fully.
According to the director-general of the National Bank of Cambodia, Chea Serey, the new cryptocurrency system will be operations in the ongoing fiscal quarter, calling Bakong “the national payment gateway for Cambodia.”
The new cryptocurrency will help payments companies huddle together on the same platform. This will make payments made by end-users easier. They will find it simpler to transfer money to each other, without worrying about the organizations they bank with. The country is also planning to start a cross border payment system using Bakong.
How is Bakong different?
Bakong is an implementation of blockchain technology that allows central banks/governments to enter the crypto space. The world has long discussed the possibilities of a central bank digital currencies, but most major economies are still mulling over the prospects of such a coin. France and China are the two largest economies where a CBDC is being discussed with great enthusiasm.
Bakong will be a closed system, but it will be backed by Cambodia’s banking system and its central bank. Every user will get a software wallet linked to their bank account which will give them new ways to interact with hard currency. The transactions on the system will be made in real-time and the central bank will store all accounts of money movement in a centralized record.
This is a far cry from other popular digital currencies like Bitcoin, which depend on a completely decentralized and open system. No single organization keeps records of all transactions or acts as a guardian/monitor of accounts. Moreover, the Bitcoin system is completely detached from the traditional banking systems. Cambodia’s move to create a CBDC will help in improving awareness and demand for digital coins.