Japanese Ministry of Economy, Trade and Industry to initiate CBDC research with SORAMITSU in Vietnam, Fiji, and the Philippines

Cambodia's Bakong System: A Best Practice With International Relevance

In 2018, SORAMITSU began work with the National Bank of Cambodia on Bakong, a digital currency and backbone payment infrastructure based on Hyperledger Iroha, an open-source distributed ledger technology (i.e., blockchain) which we developed. Bakong was piloted in 2019 and brought into use nationwide in 2020. Currently, Bakong is used to process both wholesale payments (large interbank transfers) and retail payments between everyday consumers and businesses. According to the National Bank of Cambodia, as of November 2021, around 7.9 million people had participated in Bakong transactions – meaning that in the year since Bakong's launch, it has been used by nearly half of the Cambodian population (16.7 million).

Additionally, more than 270,000 previously unbanked or underbanked rural Cambodians have opened Bakong accounts, enabling them to send and receive payments instantly and at no cost. Bakong has also enabled the streamlining of cross-border financial infrastructure with neighbouring countries Malaysia and Thailand, reducing the fees and hassles associated with traditional international remittances. These achievements establish Bakong as a significant validation of the capacity of digital currencies to improve economic efficiency, boost financial inclusion, and reduce burdens on vulnerable populations such as migrants.

Extending Expertise From Cambodia to the APEC Region — By Way of Japan

In 2021, on the basis of our experience in Cambodia, SORAMITSU was selected by Japan International Cooperation Agency to lead a study in Laos on the feasibility and potential systemic benefits of introducing a CBDC using a Bakong-like architecture. In active cooperation with the Bank of the Lao P.D.R., we are making steady progress in our research on the state of banking and microfinance in the country, as well as on the current state of financial infrastructure and strategies for improving it. The central bank has expressed particular interest in the use of blockchain and other advanced financial technologies in which SORAMITSU has expertise, and has formed a project team to explore pathways to introducing a CBDC.

We are honoured to announce that our APEC CBDC research has recently been selected by the Japanese Ministry of Economy, Trade and Industry (METI) for extension under its FY2022 Feasibility Study Project for Overseas Development of High-Quality Infrastructure and Energy Infrastructure. Working from a basis of technological expertise and concrete implementation experience, we will approach central banks and financial authorities in Vietnam, Fiji, the Philippines, and other Asia Pacific countries to investigate financial infrastructural conditions, socioeconomic and policy needs, and the capacity of CBDC to address such needs. In cases which are assessed as high-potential, additional research will delve into the technical feasibility and potential socioeconomic impacts of specific CBDC models.