Explore the Effects of Cambodia's Financial Evolution

The continuation of the COVID-19 situation for more than two years and the emergence of new variants have encouraged businesses throughout the world to utilize technology to stimulate economic growth. While we are in the midst of a lockdown in an effort to restrict new outbreaks, the economy and companies must function as usual.

In Cambodia, ninety percent of the economy is driven by the US dollar, which was employed in the early stages of the country's post-war reconstruction. Cambodians tend to dislike using the indigenous currency, the riel, and presently the nation has one of the highest rates of U.S. dollar usage in the world outside of the USA. To persuade Cambodians to use the riel the government is promoting a digital payment channel that provides a way for individuals to reduce their need to carry and handle cash. In addition, Cambodian businesses have turned to e-commerce, consequently increasing the need to switch from cash to digital money for the ease and security of small users and to diminish the importance of the US dollar.

"Bakong", Cambodia's digital payment system, is a blockchain-based payment system that serves as the country's payment backbone. The objective is to make it easier for Cambodian migrant workers to send money back home and to encourage them to utilize the local currency rather than the dollar. It is a Central Bank Digital Currency (CBDC), employing the most secure blockchain technology for ownership transfers, and an impressive feat of financial innovation because it will assist consumers obtain the greatest benefit.

The CBDC is notable for its low volatility and inability to be utilized for speculation, unlike other cryptocurrencies such as Bitcoin, and it seeks to minimize the production costs of coins and banknotes. It will be converted into digital currency to improve the efficiency of the payment system, avoid the monopolization of any one currency, and lessen the risks associated with reliance on private sector payment systems.


There are now two types of CBDC: Wholesale CBDC, intended for use by financial institutions, and Retail CBDC, intended for use by the general public and the commercial sector for payment settlement. These formats are required for use with e-wallets that are connected to cellphones or laptops.

In early 2021, Price Water House Coopers (PwC) ranked Cambodia second in the world in the development of a centralized retail digital currency, after the Bahamas. China ranked third because it was still testing usage, and many other countries in Europe and the United States are also studying and testing similar systems.

It is apparent that digital trends play a significant role in modern society, with almost every social unit attempting to adapt to shifting lifestyles. Even the banking industry recognizes blockchain as a significant financial innovation. The COVID-19 predicament encourages people to focus even more on technology and adopt the new normal lifestyle. Cambodia is an example of a nation transforming from cash and face-to-face-shopping to digital transactions, with businesses moving their operations online. And it is a country experiencing exponential technological growth. By 2020, it is anticipated that 71.3% of Cambodians will be using smart phones. According to a Datareportal poll conducted in February 2021, there were 21.18 million registered mobile phones in Cambodia out of a population of 16.83 million, meaning that many people own more than one phone. In addition, Cambodians possessed 12 million social media accounts, which corresponds to 71.3% of the total population, representing a considerable expansion of the digital world in Cambodia.

Customers interested in doing business in the Great Mekong Subregion (Cambodia, Lao PDR , Myanmar, and Vietnam) can contact the Siam Commercial Bank’s overseas branches, which are ready to provide any services they need at https://www.scb.co.th/en/corporate-banking/international-network.html

Information courtesy of Cambodia Commercial Bank (CCB): https://www.scb.co.th/ccb/corporate-banking.html

References:

1.Bran inside. “รู้จักโปรเจค Bakong ระบบธุรกรรมดิจิทัลของกัมพูชา ที่เกิดมาเพื่อลดการพึ่งพาเงินดอลลาร์” https://brandinside.asia/bakong-app-cambodia-nbc/ (ค้นหาเมื่อ 23/8/64)

2.The standard. “กัมพูชา รั้งอันดับ 2 ของโลก ขึ้นเป็นประเทศที่คืบหน้าใช้เงินดิจิทัลแบบ CBDC กับประชาชนรายย่อยในภาคธุรกิจมากที่สุด” . https://thestandard.co/cambodia-using-cbdc-currency/ (ค้นหาเมื่อ 23/8/64)

3.อีไฟแนนซ์ไทย. “แบงค์ชาติกัมพูชา เตรียมเปิดตัวสกุลเงินดิจิทัล บากอง”. http://www.efinancethai.com/LastestNews/app.index.aspx?id=b24yWTZkdXlJR0k9&year=2020&month=2&lang=T&v=2018&security= (ค้นหาเมื่อ 23/8/64)

4. อีไฟแนนซ์ไทย. “แบงก์ชาติกัมพูชา เปิดตัวระบบชำระเงินบนบล็อกเชนภายใต้โครงการ บากอง”. http://www.efinancethai.com/LastestNews/app.index.aspx?id=RklvSGt5dlNVSGc9&year=30&month=10&lang=T&v=2018&security= (ค้นหาเมื่อ 23/8/64)

5.กรุงเทพธุรกิจ. “โควิด หนุนเงินดิจิทัลโต กัมพูชาเล็งเลิกพึ่งดอลลาร์”. https://www.bangkokbiznews.com/news/detail/953186 (ค้นหาเมื่อ 30/8/64)

6. อีไฟแนนซ์ไทย. “CBDC คืออะไร? ทำไม ธ.กลางทั่วโลกต้องเร่งศึกษา”. https://www.efinancethai.com/Advertorial/AdvertorialMain.aspx?name=ad_202002281228 (ค้นหาเมื่อ 30/8/64)

7. Datareportal. “Digital 2021: Cambodia”. https://datareportal.com/reports/digital-2021-cambodia (ค้นหาเมื่อ 31/8/64)

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