Bakong was launched in 2020 by the NBC and developed in collaboration with Japanese blockchain company Soramitsu. While sometimes referred to as a central bank digital currency (CBDC), Bakong is more similar to a tokenized deposit initiative by the central bank. Bakong has seen a surge in uptake in recent years, with around 30 million wallets to date, a figure that is 1.7 times Cambodia’s population. Acceptance of Bakong is widespread and around 4.5 million merchants can receive Bakong payments thanks to the standardized KHQR code.
One of the objectives of Bakong is to increase the use of the domestic currency, the Riel, and reduce the local economy’s reliance on the US dollar. The tactic used to achieve this was to link Bakong with the domestic payment systems of other Asian countries and to only support cross-border payments using Riel. As the transaction costs for using Bakong for cross-border payments are usually lower than other available options, this resulted in greater Riel usage. Currently, the value of Bakong transactions is still dominated by dollars (70%). However, the Riel is almost even with the dollar when it comes to the volume of transactions; the Riel makes up 49%.
Bakong will also play an important role in facilitating regional trade and investment, especially as Southeast Asian countries look to strengthen their economic ties and build closer trade relations. Bakong currently has cross-border payment arrangements with Thailand, Laos, and Vietnam and is in the process of expanding its network through collaborations with China, Japan, India, Korea, Singapore, and Malaysia. In late 2023, Bakong announced a partnership with Alipay+ enabling Chinese visitors to make payments in Cambodia using their Alipay wallets. Bakong’s connectivity will enable Cambodia to participate in an increasingly cashless and digitally connected Asia and contribute to a seamless financial ecosystem across ASEAN (Association of Southeast Asian Nations).
Bakong has also greatly benefitted the Cambodian economy by expanding financial inclusion and increasing banking penetration. With its mobile-first approach, Bakong provides an accessible and cost-effective digital banking solution that enables individuals and businesses to participate in the formal financial system without requiring traditional bank accounts. Bakong also supports digital transactions for online shopping, ride-hailing services, and small businesses enabling a more dynamic digital economy. Thus, Bakong is increasingly gaining global recognition as a notable success story of effectively implementing digital payments.