Cambodia’s blockchain payment network will go live in early 2020

Bakong could be linked with other Asean countries as cross-border transfers are part of project’s next phase

Blockchain image
Based on blockchain: Project Bakong peer-to-peer payment system will start operating in the next few months

The Cambodian central bank will soon launch a blockchain-based payment and money transfer platform, after completing a pilot last year.

The peer-to-peer payment system, named Project Bakong, will begin operation in the next few months, with the support of 11 commercial banks, a spokesperson for the National Bank of Cambodia tells FX Week sister title Central Banking.

The NBC is expected to become the first central bank to put a blockchain-based payment system into widespread use.

Other central banks, including the Monetary Authority of Singapore and the Bank of Canada, have also conducted experiments in cross-currency payments using central bank digital currencies (CBDCs) and distributed ledger technology, but no system has fully gone live.

The Hong Kong Monetary Authority and the Bank of Thailand have similarly conducted studies on using CBDCs to power cross-border payments in a cheaper and more efficient way.

Cambodia’s quasi-CBDC network could bring all domestic payment platforms together and provide interoperability to all end-users, the central bank says. Without Bakong, end-users can only make payments and fund transfers within the system of the financial institution with which they have accounts.

Bakong is a closed system, backed by the NBC and participating financial institutions, the central bank says, which is designed to make the quasi-CBDC network safe from speculation. The platform will use QR codes to facilitate payments, and link wallets and accounts held at different banks.

The NBC says it is open to exploring cross-border payments using the blockchain-based platform.

“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,” said Chea Serey, director-general of the NBC, quoted in the Phnom Penh Post. “Eventually, we hope to allow cross-border payment through the Bakong system too.”

Cross-border next

In particular, the Cambodian central bank will seek the possibility of linking Bakong with the system of other countries in the Association of Southeast Asian Nations.

Cross-border transfers will be part of Project Bakong’s next phase. The NBC has partnered with a Malaysian commercial bank, Maybank, to explore blockchain-based cross-border payment and remittance systems.

The central bank announced the Bakong project in June 2018. In total, 39 banks and financial institutions have expressed interest in taking part, the central bank says.

One of the 11 banks participating in the initial go-live stage, Phnom Penh Commercial Bank, said it will implement the Bakong system at all branches soon, the Phnom Penh Post reported.

“The Bakong wallet is currently linked to users’ bank accounts to exchange with hard currency. All the transactions will be done on a real-time basis with the records stored safely at NBC,” Phnom Penh Commercial Bank said.

This article first appeared on sister website Central Banking.

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