In Cambodia's digital finance landscape, the preference between the local currency, riel, and the US dollar on the Bakong platform has s...
In Cambodia's digital finance landscape, the preference between the local currency, riel, and the US dollar on the Bakong platform has sparked significant interest among bankers and economists alike. Data reveals a distinct trend: while lower-value transactions such as food purchases and tuk-tuk fares are predominantly conducted in riel, higher-value transactions like rent and loan repayments lean towards the dollar.
Bankers emphasize the significance of this preference, pointing out that it reflects both consumer behavior and economic dynamics within Cambodia. The National Bank of Cambodia's data indicates that the average Bakong transaction in riel stands at 11,78,223.57 KHR ($290), whereas transactions in dollars average $406.
In 2023, Bakong witnessed a total of 200 million transactions, with 66 percent conducted in dollars and the remaining 34 percent in riels. The total transaction value amounted to KHR 81.05 trillion ($20 billion) in riels and $53.76 billion in US dollars.
A notable observation is the prevalent use of smartphones in Cambodia, which has facilitated the widespread adoption of digital payments. The Association of Banks in Cambodia (ABC) highlights the role of Bakong in aligning with this technological trend, offering a convenient alternative to physical currency.
Despite efforts to promote riel circulation through initiatives like the liquidity-provided collateralized operation (LPCO), challenges persist. Bank executives reveal that the costs associated with obtaining liquidity from the Central Bank render riel-based loans less attractive, leading to higher interest rates compared to dollar-denominated loans.
Moreover, merchants' preferences for dollar transactions pose a hurdle to increasing riel usage. QR code scanners and point-of-sale machines often prioritize dollar payments, limiting the opportunities for riel transactions.
Bankers stress the importance of enhancing financial literacy and incentivizing riel-based transactions to foster economic inclusivity. They advocate for a concerted effort to promote riel usage, suggesting improvements to QR code scanners and point-of-sale systems to accommodate both currencies seamlessly.
Despite these challenges, there is optimism surrounding Bakong's growth, with transactions increasing five-fold in 2025. The government's focus on digitalization aligns with Cambodia's vision of transitioning to a cashless society, with Bakong playing a pivotal role in enhancing financial inclusion across urban and rural areas.
In conclusion, the dynamics between riel and dollar usage on the Bakong platform reflect broader economic trends in Cambodia, highlighting the need for strategic interventions to promote riel circulation and ensure equitable access to digital financial services.
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