National Bank of Cambodia
The National Bank of Cambodia (NBC) is the central bank of the Kingdom of Cambodia, responsible for formulating and implementing monetary policy to maintain price stability and promote sustainable economic development.[1] Established on 23 December 1954 shortly after the country's independence from French colonial rule, the NBC succeeded the Institut d'Émission des États du Cambodge, Laos et Vietnam and has since managed the issuance of the Cambodian riel as the national currency while overseeing foreign exchange reserves and supervising financial institutions.[2] [2] The NBC's operations were severely disrupted during the Khmer Rouge regime from 1975 to 1979, which abolished banking and currency, leading to the complete destruction of the financial system; it was reestablished as the People's National Bank of Kampuchea on 10 October 1979 following the regime's overthrow.[3] Subsequent reforms under the 1996 Law on the Organization and Conduct of the National Bank of Cambodia formalized its independence in monetary policy, emphasizing inflation control and banking regulation amid Cambodia's high degree of dollarization, where the U.S. dollar predominates in transactions despite efforts to strengthen riel usage.[4] [1] Under Governor Chea Serey, appointed in 2017, the NBC has focused on digital financial innovation, financial inclusion, and regional integration, including joining initiatives for cross-border payments while navigating challenges like external shocks and the need for robust prudential oversight to prevent systemic risks in the banking sector.[5] [6] Its key functions include setting interest rates, conducting open market operations, and ensuring the soundness of commercial banks, contributing to Cambodia's post-conflict economic recovery and growth averaging over 7% annually in the decade prior to the COVID-19 pandemic.[1]Historical Development
Establishment Following Independence (1954–1975)
The National Bank of Cambodia, known in French as Banque Nationale du Cambodge, was established on December 23, 1954, shortly after Cambodia's independence from French colonial rule on November 9, 1953. It succeeded the Institut d'Émission des États du Cambodge, du Laos et du Vietnam, the colonial-era institution responsible for currency issuance in French Indochina, thereby assuming central control over the nation's monetary affairs.[2] The bank's creation aligned with post-independence efforts to assert economic sovereignty, including the management of foreign exchange reserves and the supervision of emerging commercial banks.[2] From its inception, the bank gained autonomy to issue the Khmer riel as the national currency, with the first riel banknotes printed in 1955 to replace lingering French piastre notes and foster monetary independence.[2][7] Its core functions encompassed formulating basic monetary policy aimed at price stability, regulating banking operations, and handling international payments, though initial operations were constrained by limited domestic financial infrastructure and reliance on foreign aid.[2] By the late 1950s, the bank had facilitated the establishment of both state-backed and private commercial banks to support agricultural credit and trade, reflecting Cambodia's agrarian economy under Prince Norodom Sihanouk's leadership.[2] Annual bulletins from this period documented efforts to maintain low inflation through conservative reserve management, with foreign exchange controls tightening amid regional instability.[8] In 1964, under Sihanouk's Sangkum Reastr Niyum regime, significant banking reforms restructured the National Bank as a semi-autonomous public entity, emphasizing state control over finance to align with socialist-leaning policies.[2] Private banks were nationalized and closed, while state institutions such as the Inateancheat Development Bank for industrial lending and the Rural Agricultural Bank for peasant credit were created under the bank's oversight.[2] These changes centralized monetary authority, with the riel pegged to stable reserves to curb speculation, though chronic low savings rates—averaging below 5% of GDP—limited policy effectiveness and exposed vulnerabilities to external shocks like Vietnam War spillovers.[9] Through the 1960s and into the early 1970s under the Lon Nol government following Sihanouk's 1970 ouster, the bank continued issuing riel notes up to 1975 and enforced exchange controls via affiliated agencies, but escalating civil war and inflation eroded reserves, with U.S. aid influencing currency practices.[10] Operations persisted amid political turmoil until April 17, 1975, when Khmer Rouge forces seized Phnom Penh, leading to the bank's abrupt closure and the abolition of the riel-based system.[2]Destruction and Economic Void Under Khmer Rouge Regime (1975–1979)
Upon the Khmer Rouge's capture of Phnom Penh on April 17, 1975, the National Bank of Cambodia (NBC) was immediately closed, marking the onset of its effective dissolution under the Democratic Kampuchea regime.[2] The regime's leadership, under Pol Pot, pursued a radical agrarian communist ideology that rejected modern financial institutions as tools of capitalist exploitation, leading to the shutdown of all banks nationwide, with some structures physically demolished to symbolize the break from prior economic systems.[11] The NBC's headquarters in Phnom Penh was destroyed, its records and assets dispersed or obliterated, erasing institutional memory and operational capacity.[2] Central to the Khmer Rouge's economic doctrine was the complete abolition of money, markets, and private property, positioning Cambodia as the only nation to fully implement such a policy.[12] Currency in circulation, including the Khmer riel, was rendered worthless overnight, with the regime confiscating and destroying banknotes and reserves to enforce a barter-based system reliant on forced labor in agricultural cooperatives.[12] [11] To emphasize this rupture, Khmer Rouge forces reportedly detonated explosives at the central bank's facilities, underscoring the ideological commitment to eradicating monetary mechanisms.[12] Banking staff, deemed remnants of the old regime, faced execution or forced relocation to rural labor camps, decimating expertise and perpetuating the void.[11] This destruction engendered a profound economic void, devoid of formal credit, reserves management, or payment systems, as the regime enforced self-sufficiency through communal production quotas without incentives or trade.[11] Attempts to revive a rudimentary currency in 1976 faltered due to logistical failures and ideological purism, leaving the economy paralyzed and contributing to widespread famine and resource shortages by 1977–1979.[13] The absence of the NBC and banking infrastructure isolated Cambodia from international finance, amplifying the regime's autarkic failures and setting the stage for post-1979 reconstruction challenges.[12]Partial Reconstruction in Socialist Framework Under Vietnamese Occupation (1979–1989)
Following the ouster of the Khmer Rouge regime by Vietnamese forces on January 7, 1979, the National Bank of Cambodia was reestablished as the country's central bank on October 10, 1979, under the newly formed People's Republic of Kampuchea. It was promptly renamed the People's Bank of Kampuchea by the Council of the Revolutionary People of Kampuchea, reflecting the socialist orientation of the Vietnamese-installed government. Operating from a temporary headquarters at the former Khmer Bank of Commerce building due to the destruction of its original facilities, the institution began partial reconstruction of the monetary system amid a devastated economy characterized by widespread barter and absence of formal banking since 1975.[2] The bank's initial mandate focused on restoring basic financial functions within a centrally planned economy, serving as the monetary authority, national treasury, and provider of limited banking services including credit extension to state enterprises, deposit management, and rudimentary payment systems. On March 20, 1980, it reissued riel banknotes in denominations starting from 0.1 riel to facilitate domestic trade, civil servant salaries, and state transactions, marking the formal reintroduction of currency after its abolition under the prior regime. However, monetary circulation remained constrained, with low money supply and persistent reliance on barter in rural areas, as production capacity was severely limited and the bank primarily financed government deficits through credit creation, contributing to inflationary pressures.[2][14] Throughout the 1980s, the People's Bank of Kampuchea expanded its operational network, establishing branches and offices to reach 20 provincial and municipal locations by 1989, thereby enabling gradual extension of state-controlled financial services to regional areas. In this socialist framework, the bank lacked independence, functioning more as an arm of the state apparatus to support planned economic targets, allocate resources to cooperatives and enterprises, and manage foreign exchange inflows, which were minimal due to international isolation and reliance on Vietnamese aid. Private banking was nonexistent, and the institution's dual role as both central bank and commercial lender underscored the mono-banking structure, prioritizing reconstruction over market-oriented mechanisms.[2][3] As the decade concluded amid Vietnamese troop withdrawals in 1989, reforms granted provincial banks greater economic and financial autonomy, signaling initial shifts away from rigid central planning while the core socialist structure persisted until broader liberalization in the early 1990s. This partial rebuilding laid foundational infrastructure but was hampered by hyperinflation—reaching rates exceeding 100% annually in the mid-1980s—and structural inefficiencies inherent to the command economy, with the bank's reserves and lending primarily serving state priorities rather than broad economic stabilization.[2]Revival and Reforms Under Restored Monarchy and Market-Oriented Policies (1993–Present)
Following the 1993 United Nations-supervised elections and the restoration of the constitutional monarchy under King Norodom Sihanouk, the National Bank of Cambodia (NBC) was revitalized to support Cambodia's transition from a command economy to market-oriented policies, emphasizing monetary stability, banking supervision, and financial liberalization. The Paris Peace Accords of 1991 had paved the way for this shift by ending decades of conflict and occupation, enabling the NBC to refocus on core central banking functions amid rapid economic reopening and foreign aid inflows. By 1993, the NBC had unified official and market exchange rates de facto, adopting a managed floating regime to stabilize the Cambodian riel (KHR) against the U.S. dollar, which helped curb hyperinflation inherited from prior instability.[15] In 1996, the Law on the Organization and Conduct of the National Bank of Cambodia was promulgated on January 26, establishing the NBC as an autonomous public entity with commercial and industrial characteristics, granting it independence in monetary policy formulation, foreign exchange management, and oversight of the banking sector. This legislation marked a pivotal reform, separating central banking from fiscal interference and empowering the NBC to issue currency, manage reserves, and regulate financial institutions under a two-tier system—central bank and commercial entities—building on initial separations initiated in 1989 but deepened post-1993. Complementing this, the Law on Banking and Financial Institutions, enacted in the late 1990s, introduced licensing requirements, capital adequacy standards, and prudential regulations to foster a sound financial environment, addressing vulnerabilities exposed by weak post-war institutions and dollar dominance.[16][2][17] Subsequent reforms under Governor Chea Chanto, appointed in the late 1990s, included abolishing the NBC's mandatory 15% stake in private and foreign banks by 2001, promoting competition and foreign investment in the sector. The 2001–2010 Financial Sector Blueprint further modernized operations, enhancing public confidence through improved supervision, risk management, and integration with international standards, resulting in expanded banking networks and the growth of commercial banks from a handful to 36 by the 2020s, alongside 11 specialized banks and 39 microfinance institutions. Ongoing efforts since the 2010s have targeted de-dollarization via policies incentivizing riel-denominated loans and deposits—such as interest rate differentials and tax payment requirements in KHR—to reduce dollarization rates from over 90% in the early 2000s, though persistent high dollar usage reflects entrenched habits and limited riel convertibility.[18][2][19]Governance and Organizational Structure
Board of Directors and Key Leadership Roles
The Board of Directors constitutes the supreme governing authority of the National Bank of Cambodia (NBC), tasked with formulating strategic policies, approving major operational frameworks, and ensuring alignment with national economic objectives; it comprises seven members representing diverse stakeholders including government entities, academia, the private sector, and NBC staff, convening at minimum once every two months.[20] The Chairman of the Board simultaneously serves as Governor and Chief Executive Officer, wielding executive responsibility for policy execution and routine management while reporting to the Board; this position is filled via royal decree upon recommendation from the Royal Government, with provisions for replacement or dismissal under identical procedure.[21] As of October 2025, H.E. Chea Serey holds the Governorship, having assumed the role in March 2023 as the institution's first female appointee, succeeding Chea Chanto after her tenure from 1998 to 2023.[20][22]| Member | Position/Representation |
|---|---|
| H.E. Chea Serey | Chairman and Governor |
| H.E. Sum Sannisith | Deputy Governor |
| H.E. Huot Pum | Representative of the Head of the Royal Government |
| H.E. Ros Seilava | Representative of the Ministry of Economy and Finance |
| Mrs. Eng Netra | Representative of Academia |
| Mr. Lay Mengsun | Representative of the Private Sector |
| Mr. Mom Dareth | Representative of NBC Staff |