Cambodia's National Bank Governor, Dr Chea Serey, pushes multiple boundaries beyond their established standards
To say that Dr Chea Serey stays busy is an understatement. As Governor of the National Bank of Cambodia (NBC), she is responsible for overseeing the nation’s crowded banking sector, as well as devising and implementing some of the most cutting-edge financial projects being developed in Cambodia. Gaining recognition locally, regionally and increasingly around the world thanks to a constant drive to innovate the Cambodian banking sector and the launch of Bakong, the NBC’s flagship quasi-central bank digital currency project, Serey continues to push the boundaries of banking and finance in Cambodia’s rapidly expanding digital economy.
One of few women in Cambodia holding high office, she represents a new generation of government officials and policy makers who are guiding Cambodia into a new era. From fintech and financial inclusion to global cooperation and climate change, the NBC policies that will shape the coming decade are, in large part, a product of Serey’s forward-looking perspective and passion for her work, as well as a commitment to contributing to her country’s socio-economic development.
One angle to fulfil this passion is creating a path for Cambodia’s roughly 5.5 million under-banked citizens to take advantage of the financial services and tools offered by hundreds of financial institutions.
“Access to finance has been recognised by the United Nations as one of the key tools to reduce poverty,” she said. “People who are able to access formal financial services are able to improve their livelihoods by freeing their income to grow their business using money that they’ve borrowed.”
Serey believes that digital tools are key to achieving financial inclusion, including the e-wallets and payment service providers (PSP) that dominate Cambodia’s dynamic fintech space. Serey sees these tools, which serve an important purpose by enabling digital transactions worth billions of dollars annually, as a stepping stone rather than an end goal.
“Digital payments allow people to access financial services easier,” she explained. “If we are able to bring them into the digital payment space, they’ll create a digital footprint. With this footprint they can create a profile for themselves, when they become a student and need a student loan, or when they settle down and have a family and need to buy a house. These footprints create a history of their payment behaviour that would allow banks to better understand them and, therefore, create a credit product that is suitable for them.”
Serey is not alone in her ambition for broader, more meaningful digital financial services to improve access to capital for Cambodia’s students, entrepreneurs and homebuyers. Market leaders like Wing and ACLEDA, as well as a host of other players are all working to expand their digital services and provide access to loans, often without the need for collateral.
While getting capital into the hands of people across the country is important for individuals, families and the national economy, there are risks associated with the increased availability of loans. Due to Cambodia’s saturation of providers, over-indebtedness has been cited by a number of economic watchdogs and human-rights organisations as leading to problematic outcomes for borrowers across the country. Understanding these potential risks, Serey believes that it is essential for education, outreach and training to go hand-in-hand with efforts to increase financial inclusion.
“Being able to access funding can help improve someone’s life, of course, but not everyone knows how to use it properly and that is something that we need to work on. What is important is educating people on how to use finance properly and not to fall into a trap of too much debt,” she explained. “Financial literacy is definitely something that the central bank has been working on through various channels, whether on our website called Let’s Talk Money, or on our Youtube channel where we publish short videos about educating people on managing their finances properly, and asking the right questions to financial institutions.”
This outreach is a key part of the NBC’s efforts to lay a foundation for financial literacy in the country. However, it’s not the only strategy being used with education in mind.
Opened in 2019 to commemorate the NBC’s 40th anniversary, Phnom Penh’s SOSORO Museum is an interactive space chronicling 2,000 years of monetary history in the Kingdom (see page 124). It is carefully curated and home to dozens of exhibits. Guests follow Cambodia’s lineage of empires and societies and learn about the different systems of payment, finance and economics that shaped these cultures. Designed to spark curiosity about the way that money works and influences society, the museum is a treasure trove of interactive exhibits, ancient artefacts and unique learning experiences.
As visitors trace Cambodia’s monetary history from the barter systems of Angkor through the vibrant currency of the French Protectorate period, they eventually reach the UNTAC era following the Paris Peace Accords of 1991. The US dollar became the main currency due to its reliability and strength, while the Khmer riel was rebuilt, establishing a de facto dual currency system that the NBC continues to manage. While much has been made in recent years of the efforts aimed at Cambodia’s so-called de-dollarization, Serey is quick to point out that the issue is more complex than simply switching from the US dollar to the Cambodian riel.
“We don’t call it de-dollarization because it gives the understanding that we want to take the US dollar out of the economy, which is not the case,” she said. “What we want to do is increase the use of the local currency.”
Citing the benefits of this quasi dual-currency system, Serey noted the relative monetary stability and increased confidence of international investors that the US dollar provides. However, she also laid bare the complications that using foreign currency can create at the macroeconomic scale and the reasoning behind the NBC’s efforts to promote the Cambodian riel.
“Ultimately, we need to strengthen the use of our own local currency, simply because if we don’t use enough of our own currency we will lose independence and certain tools used in conducting our monetary policies,” she explained. “As the name suggests, when you carry out monetary policy, you manage money and you can’t manage money that you don’t print. You can only manage money that you print, and in this case, I can only manage Khmer riel.”
Along with efforts to increase use of the riel, the NBC’s primary tools for monetary policy are managing reserve requirements for financial institutions and controlling the exchange rates on foreign currency. The NBC has also developed a money market by issuing Negotiable Certificates of Deposits (NCDs) that allow interbank lending on a secured basis and mitigate risks associated with liquidity management.
Her vision for Cambodia’s economic future reaches far beyond the borders of the Kingdom. Through a host of international projects – including memoranda of understanding (MoU) focused on fintech solutions and information sharing with other developing countries such as Rwanda, Fiji and the Solomon Islands – the NBC continues to cut a path as an innovator in the sector.
Closer to home, cooperation with neighbours Laos and Thailand has led to the launch of QR code payment systems that facilitate cross-border purchases and could help drive sub-regional connectivity and trade. Digital frameworks to streamline the remittance process for Cambodia’s roughly one million migrant workers in the region are under development as well. This global perspective can also be felt in Serey’s concerns about climate change and the NBC’s responsibilities and policies regarding green financing and risk mitigation.
“As a central bank we have to lead by example,” she said. “So as part of our strategy, we make sure we don’t invest in projects that adversely affect climate change, such as deforestation and oil industries; even though those are sectors that are generating a higher return.”
Along with this careful investment strategy, the NBC is developing a green finance taxonomy to guide financial institutions in their own efforts to tackle climate change. Serey and her team are working on disclosure protocols to give banks and financial institutions a pathway to inform clients and regulators about the ways that they are investing in green finance and supporting Cambodia’s efforts to address the existential threat of the climate crisis at home.
Looking ahead, Serey and her colleagues at the NBC continue to examine all the available pathways to support Cambodia’s economic development in a globalised and increasingly digitalised world. Even when dealing with challenges as monumental as climate change, the ambition tempered by pragmatism that has become a hallmark of her work
shines through.
“This is not something that one agency can work on. We need cooperation with many agencies. Not even just in a domestic context but also regional and global contexts,” she said. “These are much bigger issues. For us, we are just trying to do what we can within our understanding and within our power.”
