Why a CBDC in the Kingdom of Cambodia?
CBDC has been widely acknowledged as a high-potential means of improving financial system efficiency, resilience, and inclusion: a 2020 Bank for International Settlements (BIS) survey of 66 central banks found that 80% were engaged in some kind of CBDC research or experimentation.
The National Bank of Cambodia (NBC) began its CBDC work in 2016 with the inauguration of Project Bakong, named for a temple of the ancient Khmer Empire dedicated to Lord Shiva. The Project's aim was to explore the capacity of digital payment systems to mitigate burdens for banks, to encourage the use of the Riel, and––most importantly––to enhance financial inclusion among underserved citizens.
The NBC concluded that fulfilling these criteria would require a retail CBDC, i.e., a fiat-backed digital currency designed for everyday citizen use as well as large-transaction interbank (wholesale) use. Distributed ledger technologies (DLT) were deemed the most promising way of implementing such a system. In 2017, the NBC selected Hyperledger Iroha––a blockchain platform, commissioned by the Linux Foundation Hyperledger Project, which SORAMITSU maintains and develops––as the ideal DLT for retail CBDC use. Effective cooperation between the NBC and SORAMITSU teams made an ambitious three-year implementation timeline possible.