TOKYO -- The National Bank of Cambodia will develop a blockchain-based payment system with help from a Japanese financial technology startup to offer people a secure, low-cost way of sending and receiving money.
The central bank, which doubles as the Southeast Asian country's financial regulator, has decided to work with Tokyo-based Soramitsu after examining multiple alternatives. This is thought to be the first time a foreign central bank has adopted blockchain technology developed by a Japanese company. Soramitsu's Iroha distributed ledger technology is affiliated with the Linux Foundation's Hyperledger project aiming to advance blockchain technologies for use across industries.
Distributed ledger, or blockchain, technology is an internet-based record-keeping system in which participants share and compare -- and thereby monitor and maintain -- logs of various transactions. The digital currency bitcoin runs on such a system that is monitored by all parties involved. Iroha, by contrast, lets only certain parties take part in the monitoring process. Soramitsu claims its system works much faster than bitcoin, since it can handle around 1,000 times more transactions at once.
ATMs and other modern financial infrastructure are not widely accessible in Cambodia. For this reason, simple tools to send money and make payments via mobile phone are quickly gaining traction.
The central bank is trying to keep up with this trend, apparently mulling responses including the development of new payment methods unbound by physical currency. The ultimate goal is to create a low-cost, stable payment infrastructure for the country.
Central banks globally are experimenting with digital versions of their national currencies. Sweden's Riksbank in March laid out plans for a study on issuing so-called e-krona. In Singapore, blockchain technology is being researched as a means to facilitate international transactions between banks.