Financial Crime World

Cambodia’s Banking Sector Shifts Gears to Mitigate Dollarization Risks

As Cambodia aspires to middle-income status, the country is taking proactive steps to reduce its reliance on foreign currencies and promote the use of the Khmer Riel as a stable store of value. In a move aimed at bolstering the role of the National Bank of Cambodia (NBC) in monetary policy-making, the government has introduced measures to increase the use of the local currency.

Promoting the Use of Local Currency

Under the new plan, all taxes and utilities will be paid in Khmer Riel, with the NBC maintaining a stable exchange rate to ensure its value. This shift is expected to promote price stability and sustainable economic development for the Kingdom.

Key Benefits

  • Increased use of local currency reduces reliance on foreign currencies
  • Promotes price stability and sustainable economic development
  • Supports the growth of the country’s economy

Banking Sector Response

To facilitate this transition, top banks such as Phillip Bank are introducing products and services that cater to customers’ needs. “We’re committed to continuously introducing products and services that help support and grow communities in Cambodia,” said Mr. Ong Teong Hoon, Director and Shareholder Representative of Phillip Bank.

Fixed Deposit Rates Offer Attractive Returns

Fixed deposit rates in the Kingdom are among the highest in the region, averaging 5.5% to 8% depending on tenure and currency. Local loans, while not cheap, have seen an increase in recent years, driven by rapid economic growth in sectors such as infrastructure, construction, and tourism.

Digital Banking on the Rise

The digitalization of Cambodia’s banking sector is another key trend, with mobile payments experiencing a significant surge. According to the NBC, the number of registered e-wallet accounts has reached 20.2 million, with transactions jumping by 333.7 million in the first half of this year.

Challenges and Opportunities

Despite challenges such as the lack of a credit bureau and high informality in the economy, Cambodia’s banking system offers opportunities for businesses and investors. The country’s securities market is growing, with some listed companies experiencing significant gains.

Key Facts

  • The National Bank of Cambodia (NBC) regulates all banks in Cambodia.
  • The Ministry of Economy and Finance (MEF) sets the overall financial policy framework for Cambodia.
  • The Association of Banks in Cambodia (ABC) represents the banking sector and provides a forum for discussion on common issues.
  • The International Monetary Fund (IMF) and World Bank operate in Cambodia, providing technical assistance and financial support.

For more information on navigating the local environment or seeking out collaboration opportunities and trustworthy partners in Cambodia’s banking sector, contact our team at Aquarii.