Central banks worldwide have been actively exploring innovations in financial infrastructure, with blockchain technology emerging as a key area of experimentation. While a comprehensive, long-term evaluation is necessary to assess the viability and systemic implications of such developments, Cambodia's experience offers valuable insights. As policymakers and regulators in various jurisdictions seek to modernise their payment ecosystems, the Cambodian case provides a critical reference point for understanding the practical implementation, operational challenges, and broader economic impact of blockchain-enabled financial systems.

The National Bank of Cambodia's latest annual report provides an interesting perspective on the rapid evolution of digital finance, particularly through the expansion of the Bakong payment system. In 2024 alone, Bakong facilitated transactions worth US$ 104.81 billion—an extraordinary 330 percent of Cambodia's GDP. This figure not only underscores the system's growing importance but also signals a fundamental shift in the country's financial architecture, where digital payments are increasingly complimenting traditional banking channels.

Bakong balances are fully backed by deposits at commercial banks, positioning it not as an alternative form of sovereign money but as an efficient clearing and settlement mechanism.

A common misconception is that Bakong functions as a central bank digital currency (CBDC), likely due to its association with the National Bank of Cambodia. However, a more precise characterisation would be that of a tokenised deposit system. Unlike a conventional CBDC, Bakong balances are fully backed by deposits at commercial banks, positioning it not as an alternative form of sovereign money but as an efficient clearing and settlement mechanism. This distinction is critical, as it suggests that the system enhances, rather than displaces, existing financial institutions.

Rapid Growth

A closer look at its structure reveals a telling asymmetry. A single payment provider may operate a small number of bank accounts while supporting thousands of digital wallets. As a result, the total number of Bakong-linked bank accounts—642,500—remains relatively modest, even as the number of wallets in circulation has surged to 30 million. This divergence suggests that while the formal banking infrastructure remains intact, consumer behaviour is shifting toward digital wallets as the preferred mode of financial interaction.

Merchant adoption has also been significant, with 4.5 million vendors integrating Bakong transactions through a universal QR code system that consolidates multiple payment methods. This rapid adoption raises important questions about the trajectory of digital finance: Are we witnessing the early stages of a broader transition away from traditional banking towards decentralised, technology-driven financial models? Or is this simply a case of the financial system adapting to new efficiencies while retaining its core institutional structures?

Emerging economies are embracing digital payments with a keen focus on both inclusion and resilience, ensuring that innovation enhances financial access without compromising stability.

The key lies in how regulators and policymakers navigate this shift. Emerging economies are embracing digital payments with a keen focus on both inclusion and resilience, ensuring that innovation enhances financial access without compromising stability. By learning from past challenges and proactively shaping regulatory frameworks, these economies are not just adapting—they are leading the way in building a more efficient, secure, and inclusive financial future.