Cambodia officially launches digital currency backed by central bank

Cambodia officially launched on Wednesday a central bank-backed digital currency that draws on blockchain technology designed by a Japanese company.

The e-money "Bakong", an initiative of the National Bank of Cambodia, joins a very small group of digital currencies backed by central banks that have gone fully operational.

Bakong, which supports transactions in the dollar and riel, the Cambodian currency, is expected to help Cambodians make payments and transfer money between individuals using their smartphones.

The e-money can be used through the mobile app installed on a smartphone. While the number of Cambodians who have traditional bank accounts is limited, smartphones have reached every corner of the Southeast Asian country.

At Wednesday's launch event in the capital Phnom Penh, Chea Serey, director general of central banking at the National Bank of Cambodia, expressed hope that the e-money will play a role in preventing the spread of Covid-19, the disease caused by the coronavirus.

"I hope the official launch of Bakong system today will help to promote social welfare and also prevent the spread of that disease through facilitating e-payment from person to person seamlessly without involving cash," she said.

Bakong was named after a prominent ancient temple in the country.

Japanese financial technology startup Soramitsu Co was involved in designing the system.

The central bank began its pilot use in July last year. So far about 20 financial institutions have participated in the project, with dozens more expected to join.

Users of the mobile app can make payments and transfer money from their e-wallets by scanning QR codes or tapping in phone numbers.

Pen Chenda, a senior official of the Cambodian Association of Finance and Technology, said Bakong would particularly benefit small businesses due to costs and risks associated with handling cash.