The National Bank of Cambodia (NBC) has been re-established for 41 years – since October 10, 1979 – playing an important role in developing an efficient, stable and sustainable banking system.
However, some among the public still wonder what the full role of the NBC is.
The NBC is the monetary authority and regulator of the banking system in Cambodia. As the monetary authority, the NBC is the sole issuer of the national currency – the Khmer riel – with the role of stabilising the riel.
In this regard, the NBC prepares and implements monetary and exchange rate policies in consultation with the Royal Government of Cambodia within the framework of the economic and financial policies of the Kingdom of Cambodia. As the regulatory authority, the NBC grants and revokes licences, and regulates and oversees banking and financial institutions in Cambodia.
In addition, the NBC regularly analyses the economic and monetary situation, issues reports and bulletins, monitors the national payment system, collects statistics, balances, and participates in foreign debt and credit management.
The NBC has three main roles in general.
The first is to maintain price stability, creating a favourable environment for investment, consumption and business.
Over the past two decades, the value of the riel has maintained good stability and contributed to maintaining inflation.
This is an indicator that consumer prices remain low at around 2.5 per cent on average annually, which maintains the purchasing power of people’s incomes.
When the national currency loses value or fluctuates too much, local and international investors lose confidence in a country’s economy and its monetary control.
The second main role is to control the banking system. The banking system plays an important role in mobilising savings to provide to those in need of credit. Such intermediates are very important in supporting and promoting the economic development of a country.
Companies and enterprises that want to expand their business but do not have enough capital can get financing from banking and financial institutions through credit.
But this credit can only be obtained if the public has confidence in the banking system by depositing their savings in banks and other financial institutions.
Therefore, the NBC must ensure that the banking and financial institutions are qualified to earn the trust of the people with regulations and regular inspections.
Currently, banking and microfinance institutions have increased the total amount of deposits into the economy to around 129.1 trillion riel, with credit at around 141.8 trillion riel.
The continuous growth of the banking system has allowed many Cambodians to have access to a wide range of banking services, such as home loans, product instalment loans, deposits, transfers and payments, with convenient mobile services commonplace.
The third main role is to control the payment system through the continuous modernisation of the financial infrastructure, which allows the banking system to run smoothly and efficiently.
Electronic banking services facilitate payments, transfers and deposits, while fast payment systems enable the highly secure and efficient payment of investments and goods and services – both domestically and internationally.
Currently, Cambodia has the fastest mobile payment system usage rate in the entire ASEAN region, with accounts – which people can pay with and send money nationwide and across borders – having reached around 8.2 million.
For factory workers, for example, such mobile payment systems can help them transfer money to their families in the provinces easily, quickly and cheaply.
For the Royal Government of Cambodia, such a payment system is used to pay salaries to public servants, collect taxes and pay for public services such as water and electricity. This in turn increases transparency and efficiency in public institutions.
Contributed by the National Bank of Cambodia