Central Bank Digital Currency (CBDC) is gaining momentum in the world of finance. As a new form of digital money, decoupled from the traditional banking system, CBDC offers an alternate way to experience and interact within the economy. Many experts consider it a possible precursor to a cashless society and it could potentially revolutionize global finance, as data analytics and automated processes would become even more integrated with payment systems.
The CBDC efforts in southeast Asia continue with the latest announcement at Ledger Insights, whereby the National Bank of Cambodia and Malaysia’s Maybank launched a mobile cross-border remittance service. It seems that Cambodian users of Bakong, which the article refers to as the Cambodian payment system that uses a ‘quasi-central bank digital currency’ (we don’t know what that means exactly) can receive up to USD 2,500 in real-time from a Maybank MAE app.
We have been pointing out all the CBDC and cross-border activity over in Asia Pacific, particularly among ASEAN nations. It is interesting that the Fed (or certain parties within it) remains a major skeptic of CBDC activity, but we assume we’ll get a better picture with the expected Fed report in September around the subject.
‘When it comes to researching CBDCs, improving cross-border transactions is a key motivation for many central banks. This is because a large proportion of international remittances is made from people sending money back home….In 2020, the total value of remittances across the world totaled $702 billion, of which $540 billion was to low and middle-income countries, according to figures from the World Bank….Yet despite the high demand, remittances are typically slow, expensive and subject to variable fees, depending on the region, provider or corridor.’
So the cross-border utility of these digital currencies remains a large appeal, and we’ll see where it goes from here. This is just remittance, not a B2B use case. Readers keeping up with the subject may want to dig in a bit more.
“One of the main reasons for Bakong is to make usage of the local currency easier for the people, more convenient. And so ultimately what we want to see is direct conversion from (Malaysia’s) Ringgit to (Cambodia’s) Riel,” said Dr. Chea Serey, Assistant Governor of the National Bank of Cambodia (NBC)….Strictly speaking, Bakong is a blockchain-based central bank payment system that uses digital currency. Some label it as a ‘quasi-CBDC’. It’s not a conventional CBDC because many payments are not in local Riel and the wallets are linked to bank accounts….Meanwhile, this week, it was revealed that the Bank of Korea will also be advancing its cross-border CBDC trials with participation from Samsung, which will research cross-border payments to other mobile phones or connected bank accounts.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
