Cambodia launches CBDC co-developed with SORAMITSU

By Edil Corneille

The National Bank of Cambodia (NBC) began its Central Bank Digital Currency (CBDC) work in 2016 with the inauguration of Project Bakong. The project’s aim was to explore the capacity of digital payment systems to mitigate the burden for banks, to encourage the use of the Riel, and to enhance financial inclusion among underserved citizens.

In use nationwide since July 2019, and recognized with a Central Banking Award in October 2020, the Bakong system will act as the backbone of the Cambodian payment and settlement infrastructure.

“We aim to improve financial inclusion, efficiency, and safety, as well as promote the use of our local currency. Bakong will play a central role in bringing all players in the payment space in Cambodia under the same platform, making it easy for end-users to pay each other regardless of the institutions they bank with,” Her Excellency Madam Chea Serey, Director General, National Bank of Cambodia stated.

“Bakong will eventually create financially inclusive ecosystems that all the stakeholders in the industry can benefit from,” Shin Chang Moo, President, PPCBank said.

Bakong is a multi-stakeholder system that enables instant and final transactions using digital Cambodian Riel (KHR) or United States Dollars (USD). Co-developed by the National Bank of Cambodia and Japanese/ Swiss FinTech company SORAMITSU, it is built to handle the needs of numerous banks and 17 million consumers.

“We have been diligently building solutions with the National Bank of Cambodia for over three years now, and are currently readying the technology for deployment in other countries and new markets. It is an extraordinary honor to receive an award from Central Banking recognizing our technical contributions to the practical realization of central bank digital currencies,” Makoto Takemiya, CEO, Soramitsu Holdings AG mentioned.

Bakong works seamlessly and securely in concert with Cambodia’s legacy payment systems and has already been embraced by 18 financial institutions nationwide. A user-friendly smartphone app allows anyone with a domestic phone number and bank account to maintain a digital Riel or USD wallet, transfer between accounts, and make person-to-person and point-of-sale payments via phone number or EMVCo-compatible QR code scan.

Bakong Core is powered by Hyperledger Iroha, a permissioned append-only distributed ledger or blockchain, which records all transactions immutably in a chronological chain of records stored in multiple nodes. The Core runs on physical infrastructure maintained by NBC, but identical ledger copies are shared with selected institutions; this ensures redundancy and resilience. Byzantine fault tolerant consensus is used to validate transactions across the ledger copies, eliminating the double-spending problem, the risk of fraud, and counterparty risk.