- Large number of unbanked inhabitants will be receiving advantages from the payment system based on blockchain.
- Digital currencies will prove to be more beneficial for small economies.
- Lower degree of monetary as well as virtual knowledge is an obstacle to beat.
Benefits to the Unbanked
When the Cambodian Central Bank initiated the pilot program for virtual payment systems back in July 2019, the major objective was to escalate the monetary inclusion in the nation, and to stretch the utilization of the domestic currency over US Dollar. But the coronavirus pandemic hit right during that time span.
The pandemic proved beneficial for the National Bank of Cambodia which had been exploring a payment system based on blockchain since 2016, as it escalated Bakong adoption among the citizens. Bakong is a name adopted from an immemorial Khmer Temple, located near Siem Reap.
Bakong was launched officially back in October 2020, which offered a platform for over a dozen monetary institutions and banks, 5.9 Million users have connected and almost $ Billion worth of transactions have been performed as of now, as per a report of National Bank of Cambodia. The Director General of NBC Chea Serey stated in an interview that, “We didn’t foresee a pandemic when we launched in 2020,” Chea Serey added, “But it was a blessing in disguise, as adoption was faster because people were worried about handling money.”
Due to the pandemic, growth of virtual transactions has been escalated, with organizations promoting virtual payments and the authorities looking for a way to include them financially, for the ones that were left out due to a bad connectivity because of lower levels of literacy as well as lower accessibility to the mobile devices.
Soramitsu developed Bakong, a digital currency, that allows Cambodian citizens to utilize a free application to perform transactions with any bank. Despite having a traditional bank account. E-wallet associated with Bakong is being utilized by more that 200K unbanked users out of an estimated 17 million unbanked citizens.
Siramitsu Holdings’ group chief executive Makoto Takemiya stated, “As a large share of the population is unbanked, creating a system that people without experience with banks could find intuitive took a lot of work.” Makoto Takemia also said to a news conglomerate that the usage of mobile phones is high, and the populace is “mostly young and comfortable using mobile phones,” people have adopted it swiftly.
Benefits to the Smaller Economies
Bahamas is the very first nation to introduce CBDC, the Sand Dollar in October 2020, and Nigeria is the first African nation to introduce CBDC eNaira in October 2021. While Bakong is considered as hybrid CBDC.
Small businesses can be helped by Bakong as it can lower the price for sending remittances by more that a million immigrant workers of Cambodia overseas. Immigrant Cambodian workers in Malaysia are now able to send money to their families without the need of a bank through Bakong. Hong Reaksmey ActionAid’s director stated, “Rural families depend a great deal on money sent to them by workers in the cities or overseas. So this is critical. He added, “It’s also useful for the government to send cash transfers, and for the aid and development sector to assist families during times such as COVID-19 – which is otherwise quite hard with the large numbers of the unbanked.”
The Real Obstacles
Lower degree of virtual and monetary illiteracy, limited accessibility to the internet as well as mobile devices are still some obstacles to be tackled. A garment worker in Phnom Penh that uses a money transfer facility Wing to send money to the family. He stated that, “Bakong is a new system, so nobody is using it, and everyone uses Wing or TrueMoney, so it’s easier for me and my family to keep using that.”
“NBC is aware of the challenges,” stated Chea. She added, “Technology is a means to an end, not the end goal,” she said. “We hope to increase adoption by improving the financial and digital literacy of migrant workers and their families.”
