Cambodia Analyses Blockchain Payment System to Reduce US Dollar Use
Cambodia is launching a distributed ledger technology network for the country’s payment system. The new network is aimed at boosting the application of the local riel currency and striking down the U.S dollar use. It will promote real-time payments, and the country expects to bring down the cost of payments drastically.
While it will have various advantages for its users, the new payment’s principal goal is to decrease the use of the U.S. dollar. Serey Chea, the assistant governor of the National Bank of Cambodia, said in a statement that the U.S. dollar accounts for over 90% of the local payments. This makes Cambodia one of the most dollar-dependent economies in the world.
The DLT payment network is Cambodia’s best chance of cutting down the dollar use, and the central bank intends to exploit it fully. Chea explained that the regulator plans on launching it this year, “hopefully very soon.”
The new network will bring together the banks and e-wallets providers, enabling the users to transact among themselves. Recently, the network has 12 of the country’s banks, with Chea displaying confidence that all the financial services providers in the country will join.
The network will also enlarge to cross-border funds transfers with neighboring Malaysia. Malaysia has over 30,000 Cambodians working there, and they send funds back home to their families every month. Regrettably, the charges are excessive and end up taking up to 30% of the funds. The new system will drastically reduce these charges, enabling the fast movement of funds back to Cambodia.
The new system will also enable direct payments by the workers to institutions in Cambodia. They can, for example, directly pay school fees for their children without having to transfer the money to their families first. This will lower down the costs even further; however, more importantly, it will ensure the funds are consumed on the designed purpose and not squandered by the recipients.
Cambodia’s use of the U.S. dollar is an exception, Chea said in a statement. Ordinarily, countries that depend massively on the dollar have low economies and high inflation. Not Cambodia, she noted, stating, “In the case of Cambodia, all our fundamentals are strong. We have a very stable exchange rate, a very low inflation rate, and a very good economic outlook.”
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