Logo of Phnom Penh Post newspaper Phnom Penh Post - NBC’s Serey: ‘Bakong not a CBDC’

NBC’s Serey: ‘Bakong not a CBDC’

Content image - Phnom Penh Post
National Bank of Cambodia (NBC) assistant governor Chea Serey speaks at the panel discussion on ‘Money in the 21st century: what role for Central Bank Digital Currencies and global coins’. Hean Rangsey

NBC’s Serey: ‘Bakong not a CBDC’

National Bank of Cambodia (NBC) assistant governor Chea Serey on Monday reiterated her statement that the recently-launched Bakong, an interbank blockchain-based payment system, is not a central bank digital currency (CBDC) and is wholly fiat-backed.

She made the comment during the panel discussion on “Money in the 21st century: what role for Central Bank Digital Currencies and global coins”, which was hosted via video link by the Paris-based Organisation for Economic Cooperation and Development (OECD).

Bakong comes amid the Kingdom’s push for fintech development as a toolbox to engage the unbanked population and transition to a digital economy, she stressed.

But the transition is not seamless, she warned – high levels of digital and financial literacy, as well as access to universal and sustainable electricity, internet and mobile connectivity are notable prerequisites.

“These are long-term challenges that will require infrastructure investment. Though possible, we – especially the government – must work hard on meeting the basic needs of the people.

“I know that [Facebook’s upcoming cryptocurrency] Libra was designed with cross-border transactions in mind and that’s swell.

“At present, inbound transactions have to be exchanged into the local currency, or potentially into greenbacks, and then completed in the country. In essence, it will be of great help to the people and that’s all good and well.

“The main challenge when it comes to digital currencies is determining how to use them and identifying what we want out of them. They will back modernisation efforts and breed higher aspirations.

“At the end of the day, it all hinges on the design and what we’ve designed is a hybrid between a CBDC and a backbone payment system, which we needed more than anything else.

“That is that, and as I see it, we shouldn’t get too carried away with what to label it or the technologies it features,” Serey said.

Facebook is reportedly poised to launch Libra, which was unveiled in June last year, later this year.

But the prospect of the social media giant’s 2.5 billion users adopting the cryptocurrency has drawn a constant stream of intense scrutiny from global regulators, with many concerned that it could hive off national control over money, Reuters reported in April.

Libra was initially planned to be backed by a wide basket of currencies and government debt, Reuters said. But regulators and central banks pointed out that it could destabilise monetary policy, facilitate money laundering and compromise users’ privacy, with some threatening to ban it.

On October 28, the NBC officially launched Bakong, which, according to Serey, would enable interoperability between banks and financial institutions that is safe, efficient and cost-effective, give a powerful impetus to rural financial sector development and nurture financial inclusivity.

Speaking at the launch, Serey said the number of participants in the system stands at 18, 16 of which are banking or financial institutions and two are payment service providers.

At the same time, she added, 24 additional institutions have been granted membership in principle and are preparing to review the technicalities involved in connecting to the system.

MOST VIEWED

  • ‘Kingdom one of safest to visit in Covid-19 era’

    The Ministry of Tourism on January 12 proclaimed Cambodia as one of the safest countries to visit in light of the Kingdom having been ranked number one in the world by the Senegalese Economic Prospective Bureau for its success in handling the Covid-19 pandemic. In rankings

  • Kingdom accepts Chinese vaccine, PM first to get jab

    Prime Minister Hun Sen said China would offer Cambodia an immediate donation of one million doses of the Covid-19 vaccine produced by the Sinopharm company. In an audio message addressing the public on the night of January 15, he said Cambodia has accepted the offer and

  • Reeling in Cambodia’s real estate sector

    A new norm sets the scene but risks continue to play out in the background A cold wind sweeps through the streets of Boeung Trabek on an early January morning as buyers and traders engage in commerce under bright blue skies. From a distance, the

  • PM asks India for vaccine help

    Prime Minister Hun Sen is seeking assistance from India for the provision of Covid-19 vaccines as the country has produced its own vaccine which is scheduled to be rolled out to more than 300 million Indians this year. The request was made during his meeting with

  • Cambodia, India agree to start direct flights, tourism exchanges

    Cambodia and India have agreed to start direct flight connections and promote closer tourism exchanges and cooperation in all areas after the Covid-19 saga comes to a close. The agreement was reached during a meeting between Cambodian Minister of Tourism Thong Khon and newly-minted Indian

  • Plastic-to-rice initiative transforms waste into bricks

    Volunteers in Kampong Khlaing commune of Siem Reap province’s Sotr Nikum district have been collecting plastic waste to use as a raw material for the production of bricks and clemence tiles. The volunteers are hoping that, in addition to helping clean up the environment,