The National Bank of Cambodia (NBC), the central bank, welcomed the Bank for International Settlements’ (BIS) February 25 launch of the Asian Green Bond Fund, an open-ended fund for central bank investments in high-quality bonds issued by sovereign states, international financial institutions and corporations.
In a press statement, BIS said the fund is dedicated to helping finance investment in green projects in the Asia and Pacific region – in response to the growing demand for climate-friendly investments.
“This fund initiative will help central banks to incorporate environmental sustainability objectives into the management of their reserves,” it said.
According to the statement, the National bank of Cambodia (NBC) is a member of the advisory committee that lent support to this initiative and will be among the first subscribers to the fund, which is an innovative step towards sustainable financing.
“As climate change is increasingly viewed as one of the main sources of uncertainty for economic growth and could adversely affect social and environmental conditions, green financing opens many profitable ways for investors to help protect the planet.
“While generating profits, green bond investment can also help bring about positive environmental impacts, as it is designed to fund green projects or environmental-friendly businesses in the region. This in turn leads to an increase in green innovations and promotes sustainable development,” it said.
NBC governor Chea Chanto recognises the financial risks and advantages of investing in green bonds as well as to protect the Earth. He said the central bank plays a role in contributing to mitigating financial risks triggered by the impact of climate change on economic, social and environment conditions.
“We believe that every institution and individual can play a role in contributing to equitable and sustainable growth by reducing the rapid pace of climate change and its propagation channels.
“We strongly encourage all financial institutions to put in place policies that promoted green finance and support climate-friendly investments,” he said.
According to the NBC’s 2021 annual report, outstanding loans extended by financial institutions to all sectors have grown by 21.2 per cent to 186.4 trillion riel ($45.7 billion).
As of end-2021, Kingdom’s banking and financial institutions had restructured 22.4 trillion riel in loans for 370,785 borrowers, to ease the burden on the public amid the Covid riptide of declining revenues and to manage pressure from non-performing loans, the NBC said.
Financial inclusion was also on an upswing, as deposit and consumer credit accounts reached 12.1 million and 3.3 million, respectively, up by 40.7 per cent and 5.1 per cent year-on-year, the central bank said.