Cambodia’s central bank chief says digital currency will bolster local fiat

Cross-border QR code payments via Cambodia’s digital currency are poised to boost the use of the riel, according to central bank governor Chea Serey.

The National Bank of Cambodia‘s new digital currency, Bakong, is poised to significantly boost the use of the country’s riel currency by facilitating cross-border QR payments, Chea Serey, the governor of the National Bank of Cambodia, told Nikkei Asia.

In the interview, Serey revealed that while over 80% of Cambodia’s economy operates with the U.S. dollar under a dual-currency system, authorities are planning to increase the riel’s presence, particularly in digital transactions where the riel’s proportion is considerably higher.

Cross-border transactions are pivotal for expanding the riel’s use, Serey emphasized, adding that Bakong currently supports QR code-based payments between Cambodia, Thailand, Laos, and Vietnam, and is compatible with China’s UnionPay. By 2023, the value of digital payments through Bakong had surged to $70 billion, nearly double Cambodia’s gross domestic product, the report notes.

Introduced in 2020, Bakong aims to streamline payments for both individuals and businesses. Despite being referred to as a digital currency, Bakong differs from traditional central bank digital currencies (CBDCs) as it is backed by the Cambodian riel (KHR) and the U.S. dollar (USD).

Serey noted the complexities of internationalizing digital currencies, which necessitates integrating diverse technologies across countries to address such challenges as capital flows and Know-Your-Client processes. Looking ahead, the central bank plans to introduce cross-border payments with India by June and is also working on similar collaborations with Japan, Serey revealed.