The South-East Asian country of Cambodia is looking to a distributed ledger technology (DLT) network to reinvent their country’s payments and rid themselves of their US dollar reliance.
While at the Consensus Distributed event, the assistant governor and director-general of the National Bank of Cambodia, Serey Chea, revealed the initial plans and set out the goals of the network.
The central bank director claimed 12 other banks were trialling the new platform, which could arrive by the end of 2020. The DLT network according to Chea was created to make the cohesion between banks, E-wallet providers and customers more efficient.
The network can rid Cambodia of the US Dollar
Consumers are a key driver of the network’s creation. As any of you will know who have travelled to the beautiful country of Cambodia, most payments are done in US dollars. The local currency, the Riel, is often unused due to the high inflation which means 1 dollar equates to 4,000 Riels.
The confusion often associated with making large payments will be washed away, Shea hopes with the creation of the network. She said:
“We thought that if we were to make the payment in the electronic form, then people don’t have to be too bothered so much about the number of zeros and the inconvenience of carrying a lot of banknotes in their pocket.”
Cambodian residents will also have the ability to make instant payments using mobile wallet apps and QR codes via the proposed payment network.
Alongside the network, Chea also announced that the National Bank had begun work on a cross border payment between themselves and Malaysia’s Maybank. The focus of this project will be for migrant worker remittances.
However, it is the proposed DLT network which is central to Cambodia’s national plan and identity. Chea believes that Cambodia’s reliance on the dollar is ultimately political and one that needs to change for the “psychology” of the nation.
“In the case of Cambodia, all our fundamentals are strong. We have a very stable exchange rate, very low inflation rate, and a very good economic outlook,” she added, pointing out that with political stability in the nation and a stronger economy the dollar reliance was no longer necessary.
Much like their Asian counterparts China, Cambodia is looking to create and foster digital technologies. The National Bank has previously announced its central bank digital currency (CBDC), Project Bakong, is almost complete.