In the Kingdom of Cambodia in Southeast Asia, three-quarters (78%) of its citizens have no bank account, yet more than half own a smartphone. And even though the native currency—the Khmer riel (KHR)—has been stable for 20 years, most people there use the American dollar. Ever since a major UN mission in the mid-1990s, the price of everything from a cup of coffee to a car has been given in U.S. dollars.
Addressing these challenges and more, the National Bank of Cambodia (NBC) set out to see if a digital payment system could handle transactions faster and for lower cost than the existing system.
Could it promote wider use of the riel? And could that system run as a mobile app that any citizen with a smartphone could use to shop or transfer money to family or friends?
To find out, NBC partnered with blockchain developer experts Soramitsu on a retail payment system project that would modernize the country’s legacy retail payments with the help of the Hyperledger Iroha blockchain framework.
When most people picture a CBDC, they imagine an entirely new digital asset created out of “thin air.” The problem is, this new asset could distort a country’s monetary policy and affect its exchange rates. To be prudent, Cambodia’s central bank wanted to create a digital token backed by fiat currency stored safely in its vaults. The new payments platform would become a way to move around digitized cash, while preserving the creditworthiness and security of the central bank.
The resulting project, called Bakong, is the first retail payments system in the world using blockchain technology. Individuals can now transfer money and buy from merchants with a simple smartphone app. Merchants gain a fast, cashless, and secure payments system. And banks can do interbank transfers at much lower cost.
The pilot project went live in July 2019 and ran successfully with a network of 14 banks supporting more than 10,000 users, laying the groundwork for a large-scale rollout later this year.
Hyperledger teamed up with Soramitsu on a detailed case study covering the planning and implementation of Bakong, including key goals, milestones, security considerations and core technology requirements, as well as a preview of rollout plans and new features.
Read the full case study here.
