In April this year, the National Bank of Cambodia (NBC) announced a partnership with Japanese technology firm and blockchain specialist Soramitsu, toward the development of a public payment system over as blockchain for its citizens.
The goal was to develop ‘new payment infrastructure’, a press release revealed at the time. Soramitsu is notable for being the developer of the Iroha blockchain platform, a smart-contracts-enabled ledger which allows permissioned parties to transact at scale of around 1000x to that of bitcoin, according to the Japanese developer. Notably, Iroha is a part of the open-source Hyperledger project, led by Linux Foundation.
In recent comments to the Phnom Penh Post, the central bank’s director-general Chea Serey confirmed that a testing phase of the blockchain payments rail will take shape in the fourth quarter of 2017.
We expect the new technology to provide smooth, efficient, safe and affordable interbank transactions which will ultimately benefit end users. At this stage, we will focus on the operational functionality of the system, but we believe the system can further be customized with application development to benefit the [central] bank’s monetary policy, including the use of the local currency.
Cambodia’s monetary policy is dictated by its dependence on the US dollar and the country’s central bank is actively looking at solutions to sway control its way. Furthermore, Cambodia lacks a modern financial infrastructure so support commercial banking at scale. The shortage of ATMs in the country is an example. On the flipside, an aggressive growth in smartphone adoption rates – a 2016 study showed that nearly 50% of Cambodians owned at least one smartphone – and affordable connectivity presents an opportunity for new financial technology solutions.
To this end, the central banker sees blockchain technology as the solution. While underlining the Hyperledger Iroha platform as the most likely solution, at least during the early stages of Cambodia’s blockchain endeavor, the official confirmed the bank is “open to explore any platform suitable for Cambodia’s situation.
Notably, she hinted at a cashless future for the Cambodian economy, a concept explored by the central bank for some time now.
The central bank official added:
A cashless system is less costly and more transparent for the whole economy. This has always been on our agenda, but we needed time to study the different platforms available [before taking a call].