National Bank of Cambodia (NBC) governor Chea Chanto said growing demand for the riel has steadily increased with the public and investors over the past two decades.
Chanto said it has helped boost the development of the banking and financial sector and strengthen the economy.
He made his remarks on the 40th anniversary of the re-establishment of the riel on Monday in Phnom Penh.
He said the government decided to reissue the riel on March 20, 1980, to demonstrate Cambodia’s independence and national sovereignty and rehabilitate the economy after the Khmer Rouge.
He said the Pol Pot regime destroyed the foundations of the economic and financial infrastructure in Cambodia as well as the NBC and the riel was abandoned.
However, in the last 20 years, demand for the riel has increased by an average of 16 per cent per year.
With the Cambodian economy growing at an average rate of 7.8 per cent per year and inflation at around 2.5 per cent, the riel has been stable at around 4,050 riel per US dollar.
“I firmly believe all ministries, institutions, companies, enterprises and those who actively participate in the process of developing the banking system promote the use of the riel, which is our national currency,” he said.
He said international reserves have reached $20 billion, which could guarantee the next 10 months of imports of goods and services, more than the three-month minimum for developing countries.
Chanto said the banking sector has continued to develop strongly and expanded services nationwide, with its assets, increasing 93-fold, loans increasing 178-fold and deposits increasing 95-fold.
The growth reflects the confidence of investors in the Cambodian banking and monetary system over the past two decades, he said.
Chanto said Cambodia needs a strong national currency to strengthen its economic and financial resilience to support sustainable and inclusive socio-economic growth and development.
“In the face of the highly uncertain global economic situation, we have many challenges and tasks that need to be achieved.
“Diversification and an inclusive banking system support sustainable growth, increase income, reduce poverty and promote regional economic and financial integration,” Chanto said.
Acleda Bank president and group managing director In Channy noted the trend of using the Riel is increasing from year to year. Almost 15 per cent of the bank’s $4 billion in loans are in KHR.
Channy said: “Confidence in the riel has increased due to the National Bank law and the management of national monetary policy to ensure sustainable economic growth and when we control inflation people have confidence in it.”
Dollarisation flowed into the Cambodian economy in the early 1990s.
However, under the market economy and the two-tier banking system, the riel circulated along with the US dollar in the national economy.
In the early stages, the US dollar contributed to the development of the Cambodian economy through the promotion of foreign investment, finance, international trade and tourism.
But a growing economy and regional integration mean US dollar consumption has limited the central bank’s ability to fully implement monetary policy to support growth, according to Chanto.