Prudential regulation should also receive attention from a competition in DFS perspective. An increase in systemic risk can hint at competition issues. They interact in some ways: Fintech, Bigtech and crypto enterprises may enter the market by offering yet unregulated DFS, such as DeFi services, or having lighter regulatory requirements. The subsequent pressure over incumbents’ profits may lead the latter to take excessive risks or to attempt recovering such revenues in the shadow banking sector. Also, on digital loans, platforms that accrue fees on origination but not on retaining may allow credit quality to go down, increasing credit risk in the market. Thus, competition authorities should cooperate closely with prudential supervisors, aiming to exchange early warnings signs and tackle these problems in a holistic manner.
Country Examples
Prior to the launch of Bakong, 80% of payments and 92% of deposits in Cambodia were done in US dollars, the rest in Khmer Riel. One of the goals of putting the blockchain payment system in place was to de-dollarize the economy, taking back control of monetary policy.1;2
1. Ledger Insights (2024), “Cambodia uses Bakong cross border payments to promote local digital currency”, https://www.ledgerinsights.com/cambodia-uses-bakong-cross-border-payments-to-promote-local-digital-currency/ (accessed on 26 August 2025).
2. Ledger Insights (2021), Cambodia’s central bank: Bakong blockchain payments may help de-dollarization, https://www.ledgerinsights.com/cambodias-central-bank-bakong-blockchain-payments-may-help-de-dollarization/ (accessed on 26 August 2025).
