The recent Singapore Fintech Festival brought attention to the pursuit of a wholesale Central Bank Digital Currency (CBDC) pilot by Singapore in the coming year. While Singapore, being a developed economy, may not urgently need a CBDC, neighboring countries such as Cambodia, Laos, and Myanmar could significantly benefit from the adoption of digital fiat currencies.
Cambodia, for instance, has already made strides with its retail CBDC Project Bakong, designed by Japanese blockchain firm Soramitsu. In operation for three years, Bakong has garnered over 70 financial institutions as members, recording more than 35.4 million transactions, totaling over $12 billion. The success of Bakong is attributed to Cambodia’s high unbanked population (estimated at 70%), making CBDC a pivotal tool for financial inclusion.
Laos, with a low per-capita GDP and less than 30% of its population holding a bank account, is testing a proof-of-concept CBDC (DLak). The pilot aims to improve financial inclusion and enhance the efficiency of payments in a country heavily reliant on cash.
In Myanmar, the Digital Myanmar Kyat (DMMK) was launched in 2022 by the National Unity Government in exile, seeking to establish independent digital financial rails amidst political challenges. The DMMK, used through the NUGPay e-wallet, has gained traction, with total transactions exceeding 300 billion kyats ($150 million).
The focus on CBDCs in these developing economies revolves around addressing financial inclusion needs, overcoming underdeveloped digital payment ecosystems, and promoting efficient cross-border payments. Despite potential challenges, these initiatives are viewed as essential for establishing robust digital financial infrastructure and integrating more people into the formal financial system, contributing to poverty alleviation in these regions. As these countries progress with their CBDC endeavors, there is anticipation of increased cross-border payment collaborations and greater clarity on the digital kip in Laos and ongoing adoption of the DMMK in Myanmar.
