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Bank reserve requirements doubled

Bank reserve requirements doubled

Cambodia has doubled reserve requirements for private banks from 8.0 to 16 percent in a bid to curb money supply to stem rising inflation, officials said May 7.

The requirements will take effect from July this year, said Phan Ho, director of banking supervision at the National Bank of Cambodia, adding that the government had already informed private banks in the Kingdom.

“The measure is important to reduce so much cash circulation,” he said. “Now our GDP (gross domestic product) has increased too high, too fast. We want it to slow down because when the growth jumps too high, it is not good,” Phan Ho added.

The new reserve requirement will only affect foreign currency deposits, he said.

Cambodia’s economy has averaged 11 percent growth over the past three years, but inflation has also soared.

It cracked into double digits late last year, hovering around 11 percent, driving up the cost of food and other staple goods.

In Channy, the president of ACLEDA Bank Plc., said the measure would limit business activities.

“Now more than 8.0 percent of the money will not be used for lending,” he said. “The more lending there is, the more investment and more income for the country, as well as generating more jobs and maintaining the economic growth.”

He said the government should increase reserve requirements gradually.


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