Year: 2024
Type: article
Abstract: Cambodia is one of the first two countries that adopted a retail central bank digital currency (CBDC) in October 2020. The design of the CBDC, called the Bakong, is a bit unique. We find a few design flaws that could potentially damage the central bank and then the Cambodian economy as a whole. We show some key statistics from our own survey in 2022 to support our arguments. The Bakong is offered in two currencies, the Khmer Riel (KHR) and the US dollar (USD), as Cambodia has been highly dollarized. We discuss theoretical predictions for the CBDC based on three kinds of substitutes: paper money, bank deposits, and foreign currencies. The third one is specific to the Bakong. Unlike a typical local currency CBDC, the USD Bakong may substitute for the KHR more. Moreover, it has been announced that the retail Bakong is legally not a liability of the central bank, but from the viewpoint of the underlying technology and economics, it is a central bank liability.
Source: Asian Economic Policy Review
DOI: 10.1111/aepr.12464
Authors: Kenichi Ueda, Chanthol Hay
Institutions: The University of Tokyo, National University of Battambang
Language: English
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $2,580
OpenAlex ID: W4393051806