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Southeast Asia has 11 countries with a combined population of 700 million people, including some of the world’s most dynamic markets for digital finance: Singapore, Indonesia, the Philippines, Thailand, and Vietnam. From mobile wallets to digital banks to cryptocurrency and CBDCs Southeast Asia is usually a few steps ahead of the rest of the world when it comes to fintech.
Yet Southeast Asian countries have almost universally eschewed adoption of that most digitally forward of financial initiatives, a retail central bank digital currency (CBDC). The notable exception, Cambodia’s Project Bakong, might be CBDC-inspired, but in the words of Chea Serey, assistant governor and director general of the National Bank of Cambodia (NBC), “is not a digital currency.” Bakong is not a CBDC because the funds in the system are tokenized commercial bank deposits, not direct liabilities of the NBC.
Some Southeast Asian countries are going forward with wholesale CBDCs, but the development process is a gradual one — and excitement around these initiatives has sharply fallen off compared to just a few years back.
The OMFIF Future of Payments 2024 survey captured the change in sentiment among central banks, as just 13% of respondents saw CBDC networks as the most promising approach for cross-border payments, down from 31% a year earlier. The report noted, “High costs are the primary challenge that central banks want to overcome, but there is a remarkable diversity of views when it comes to selecting the best method for doing so.”
While many Southeast Asian countries launched trials during the CBDC fever of the early 2020s, just a few of those pilots have advanced — and largely in the wholesale space. Central bankers remain concerned about financial stability, the potential for bank runs, and the complex challenges of managing a retail CBDC. They also worry about the impact on monetary policy, privacy issues, and competition with private banks and cryptocurrencies.
For countries with advanced digital finance ecosystems, the additional benefits of a retail CBDC are often unclear. Singapore and Thailand, for instance, have been able to send cross-border retail payments instantly through their respective government-backed real-time PayNow and PromptPay networks since 2021. Both countries are also experimenting intensively with stablecoins in cross-border payments.
In Singapore’s case, the Monetary Authority of Singapore (MAS) is moving forward with a wholesale CBDC pilot. Speaking at the 2025 Singapore FinTech Festival, MAS managing director Chia Der Jiun announced that Singapore’s three largest banks — DBS, OCBC, and UOB — had successfully conducted interbank overnight lending transactions, using the first live trial issuance of Singapore dollar wholesale CBDC for settlement. He said that MAS will next trial the issuance of tokenized MAS Bills to Primary Dealers settled with CBDC.
For its part, Thailand continues to work on Project Inthanon, the Bank of Thailand’s (BOT) collaboration with eight Thai commercial banks exploring distributed ledger technology (DLT) for wholesale transactions. Inthanon successfully developed a proof-of-concept prototype for faster and cheaper domestic interbank transactions. While the BOT sees a clearer use case than in the retail segment, it does not yet seem convinced of Inthanon’s necessity.
Quasi-CBDC it may be, but Cambodia’s Project Bakong is still a trailblazer in Southeast Asia. Cambodia quietly made history three years ago with the launch of Bakong, which was designed to boost the country’s digital payments infrastructure, encourage non-cash payments, and increase use of the local currency, the riel. In its first three years of operation, Bakong attracted 74 financial institutions as members and more than 10 million customers in a country of 17.6 million people.
By the end of 2024, total Bakong volume had reached $150.61 billion (almost 330% of Cambodia’s GDP) from approximately 608 million transactions. That figure represents a 95% annual increase in transactions from 2023, driven by cross-border and tourist use.
Bakong has been a success because of its ease of use, Cambodia’s financial inclusion needs, limited competing digital payment platforms, and strong government support. Working with the Japanese blockchain firm Soramitsu, the NBC ensured that transacting with Bakong would be simple and fast. The Bakong e-wallet requires just a phone number or QR code to transfer money or make a payment. Merchants have been fast to adopt Bakong, meanwhile, because of low transaction fees.
In essence, Bakong is a digital payments first mover in the vein of Alipay in China two decades ago. For that reason, it has become a foundational part of Cambodia’s digital payments infrastructure.
Following Bakong’s success, Soramitsu began working with the government of Laos on a digital kip pilot. A CBDC that can bring people into the formal financial system more quickly than traditional digital payments alone would be beneficial for Laos, which is one of the most impoverished East Asian nations. Laos has a GDP per capita of about US$2,100, higher than Cambodia and Myanmar, but behind every other country in East Asia. In addition, less than 30% of Laos’s adult population has a bank account, one of the lowest rates in the region.
In February 2023, the central bank of Laos began testing the DLak, a proof-of-concept CBDC. During the ongoing pilot, the central bank has been issuing DLak in exchange for fiat currency that individuals can then obtain through commercial banks. Users use a QR code and app provided by the participating sellers to make purchases. Transactions made using the DLak are instantly converted to physical currency by a commercial bank, allowing sellers to receive payment in real time.
According to Soramitsu, if the Laotian central bank goes forward with a CBDC, there will be four main reasons: to boost financial inclusion, especially for Laotians without bank accounts; reduce remittance times and costs from migrant destinations such as neighboring countries; advance the sophistication of payment systems; and ensure economic security “through a local currency that does not depend on other countries.”
As CoinDesk noted aptly in describing Hong Kong’s recent FinTech Week, stablecoins are increasingly seen as the driver of new digital payment infrastructure, not CBDCs. “The shift marks a turning point in the global digital currency experiment: central banks are slowing their retail ambitions, Brazil’s Drex pause being the clearest example, while private issuers build the infrastructure that CBDCs were meant to deliver,” CoinDesk said.
The adoption of stablecoins is growing faster than digital fiat currencies because they are already available, private, and flexible. Stablecoins benefit from lower transaction fees, faster transfer times, and their use in DeFi. CBDCs, on the other hand, are hamstrung by central bank control, slowing innovation, as well as privacy concerns and technical hurdles.
It is worth noting that in Southeast Asia, Cambodia’s quasi-retail CBDC Bakong has benefited enormously from the technological and marketing capabilities of the privately owned Japanese blockchain firm Soramitsu. It is not an exaggeration to say that without Soramitsu’s innovative capabilities, Bakong would not be the success story it is today, and nor would Laos be almost three years into a digital kip pilot.
While Soramatitsu has been best known for its work on CBDCs, in October the company announced that it would begin offering stablecoin issuance consulting and technical support services in Japan. “At the core of these efforts is Hyperledger Iroha, a permissioned blockchain originally developed by Soramitsu and now maintained by The Linux Foundation,” the company said in a news release.
Ultimately, the private sector needs to lead the development of new CBDC payments infrastructure, not conservative central bankers. There is still a place for some variations on digital fiat currencies in Southeast Asia, but we expect that stablecoin use cases in the region will be greater in number, more quickly adopted, and overall more beneficial for the digital financial ecosystem.
