What is your vision and main priorities for the National Bank over the next two years?

Our vision is to enhance the monetary and supervisory frameworks that support Cambodia’s economic development. Over the next two years, our primary focus will be on managing the challenges of a highly dollarized economy, which complicates conventional monetary policy and limits our influence on inflation and interest rates. We aim to maintain a stable exchange rate, control inflation, and foster a resilient financial system.

Promoting the local currency, the riel, is a key priority. Currently, riel transactions account for about 15% of the economy. We seek to gradually increase this percentage by raising public awareness of the benefits of using the riel, and by collaborating with the government on fiscal policies that encourage local currency transactions. Our approach will be gradual, building confidence that using U.S. dollars can be done without fear of depreciation.

We also align our initiatives with the Prime Minister’s vision of transforming Cambodia into a high-income country by 2050. This includes ensuring a stable financial system that promotes productive lending, especially to small and medium enterprises (SMEs). By enhancing access to finance, we aim to support economic growth and inclusion. A key tool in this strategy is the Bakong app, which facilitates digital transactions and encourages the use of the riel.

What steps will you take to strengthen banking supervision and ensure stability in the financial system?

The rising interest rates in the U.S. pose challenges for us, and we must align our monetary policies to manage these impacts. Our focus is on maintaining financial stability through flexible policy designs tailored to our local context, ensuring we can withstand external shocks.

Strengthening banking supervision is essential for the stability of our financial system. The National Bank not only implements monetary policies but also supervises the banking sector. Our goal is to ensure that financial institutions operate soundly. We will enhance our regulatory framework, conduct regular assessments to identify vulnerabilities, and foster a culture of compliance to mitigate risks. This approach will help build public trust in our financial system.

 How does access to finance play a role in your strategy, and what initiatives are in place to support it?

Access to finance is crucial for our economy, enabling households and businesses to obtain affordable financial services. We are committed to improving financial literacy among the population through initiatives like the “Let’s Talk Money” campaign, which educates the public on financial services and best practices.

Our financial system aims to be inclusive, reaching underserved communities with tailored financial products. By addressing barriers to access, we enhance the resilience of our economy. The Bakong app is pivotal in this strategy, allowing users to make digital payments conveniently, thus improving access to financial services for all Cambodians.

Can you explain the primary strategies the National Bank is implementing to promote the riel?

To increase the use of the riel, we first need to ensure its stability. Over the past 30 years, we have maintained a consistent exchange rate of around 4,050 riel to 1 U.S. dollar, demonstrating our ability to manage a floating currency effectively. While 85% of transactions are still conducted in U.S. dollars, the riel is commonly used for smaller purchases in rural areas.

We are focusing on enhancing the convenience of the riel through digital platforms, particularly the Bakong app. This innovative system allows users to send money digitally without needing to carry cash, thereby promoting the use of the riel. Additionally, financial institutions will default to establishing local currency accounts, making it easier for users to engage with the riel.

We are also raising awareness about the historical significance of the riel and fostering a sense of pride in our local currency. Initiatives like workshops across provinces and “Riel Day,” where old banknotes are exchanged for new ones, aim to encourage its use in everyday transactions, supported by the conveniences of the Bakong app.

Where does Cambodia stand in terms of digitalization?

Cambodia is emerging as a hub for financial technology (fintech) and has made significant strides in digitalization, especially in payment systems. Our efforts extend to e-government services, improving business registration and licensing through online platforms. While challenges remain, our internet connectivity is relatively strong and affordable, facilitating digital transactions even in remote areas.

The Bakong app exemplifies our digitalization efforts, providing a secure and efficient method for digital payments. This tool supports our broader goal of financial inclusion, enabling more Cambodians to access essential financial services and fostering economic participation.

How do you perceive the potential for green financing in Cambodia?

Sustainable financing is becoming increasingly important as we address global climate challenges. While Cambodia is not a major CO2 emitter, we recognize our responsibility to contribute to reducing emissions. We are developing a roadmap for sustainable finance, collaborating with international organizations to create a clear taxonomy for green projects. This will help direct financial institutions towards funding environmentally friendly initiatives.

The potential for green financing is significant as we focus on sustainable development and renewable energy projects. By fostering partnerships with international organizations, we aim to attract investments that align with our environmental goals and economic development strategies.