Cambodia has officially launched a digital payment system which will enable people without bank accounts to make digital payments and at the same time play a part in fighting Covid-19.
Many Cambodians have no bank account, but just about everyone has a smartphone and now the new e-money can be used through a mobile app. Anyone with a phone number in the country will be able to use the system to make payments and transfers in Cambodian riel or US dollars.
The virtual money is called “bakong” after a prominent ancient temple in the country, reports Reuters.
At Wednesday’s launch event in the capital Phnom Penh, Chea Serey, director-general of central banking at the National Bank of Cambodia, expressed hope that the e-money will play a role in preventing the spread of Covid-19.
“I hope the official launch of bakong system today will help to promote social welfare and also prevent the spread of that disease through facilitating e-payment from person to person seamlessly without involving cash,” she said.
Many emerging countries have begun issuing digital currencies ahead of the world’s major economies, in an attempt to expand access to financial services and boost confidence in their own currencies says the Nikkei Asian Review.
Smaller economies are rushing to issue digital currencies because of relatively low confidence in their existing currencies. For example, more than 80% of bank deposits in Cambodia are denominated in dollars, and cash dollars are available at ATMs and are used for most transactions.
If the bakong system encourages more people to use the riel instead, the country will be able to wield its monetary policy more effectively. This likely played into Cambodia’s decision to launch the bakong before neighboring China formally launches the digital yuan.