The transformative wave of digital currencies is reshaping the global financial landscape, with 134 countries, representing 98% of the global economy, now exploring digital versions of their currencies. This seismic shift underscores the urgency for ASEAN nations, including Cambodia, to actively engage in the digital currency arena to ensure their financial systems remain competitive and inclusive in the rapidly evolving digital age.
The Atlantic Council’s recent study reveals an unmistakable trend: over half of these countries are in advanced stages of developing, piloting, or launching Central Bank Digital Currencies (CBDCs). This includes all G20 nations, with the notable exception of Argentina, indicating a broad consensus on the potential benefits and inevitability of digital currencies. However, the United States’ cautious approach, particularly its hesitancy towards a public digital dollar, contrasts sharply with the aggressive advancements seen in China, Europe, and Japan.
This divergence presents a unique opportunity for ASEAN and its member states, like Cambodia, to position themselves as pioneers in the digital currency space, leveraging these technologies to enhance financial inclusion, streamline payment systems, and bolster economic resilience. The case of Cambodia’s BAKONG system is illustrative, serving as a model of digital finance innovation within the region. As the first central bank-backed digital currency in the ASEAN bloc, BAKONG not only facilitates seamless and efficient transactions but also serves as a model for interoperability among different financial institutions and currencies.
The rapid progress in CBDC development globally, with 36 pilot projects underway, including China’s e-CNY and the European Central Bank’s digital euro initiatives, highlights the pressing need for ASEAN nations to accelerate their digital currency strategies. This is not merely a technological upgrade but a strategic imperative to ensure the region’s economies remain integrated into the global financial system and can navigate the complexities of a more fragmented international payments landscape.
The risk of lagging in this digital currency revolution extends beyond technological obsolescence. It encompasses the potential erosion of financial sovereignty and diminished influence in shaping the future of international finance and trade. For ASEAN and Cambodia, the path forward involves not only advancing their digital currency initiatives but also actively participating in global discussions to influence the standards and norms governing CBDCs.
As the world marches towards a digital currency future, ASEAN and Cambodia must embrace this tide of change. By leveraging their experiences, such as Cambodia’s BAKONG system, and fostering regional collaboration, they can ensure that their financial systems are not only compatible with the emerging global digital economy but are also at the forefront of shaping its evolution. The journey is fraught with challenges, including concerns over privacy and the digital divide, but the potential rewards for economic growth, financial inclusion, and regional integration make this a venture worth pursuing.
