The Cambodia Microfinance Association (CMA) reported that as of end-2023, loans in Cambodian riel (KHR) had increased to 25% of the total loan portfolio, while KHR deposits had risen to 16% of total. 

In their March 25 press release on microfinance’s role in promoting the use of KHR in 2023, the group said the reported figures surpassed regulatory thresholds, reflecting a growing confidence in the national currency.

“These efforts have not only built strong confidence in the riel, but also showcased the sector’s dedication to elevating the riel’s prominence within Cambodia’s financial sector ecosystem,” read the statement.

“Credit balances in the riel have reached 5.56 trillion [$1.377 billion], and deposits at [Cambodia’s] four deposit-taking microfinance institutions [MFIs] stand at 1.52 trillion riel [$376.4 million]. This demonstrates a notable shift in public savings habits towards local currency,” it added.

CMA president Dith Nita emphasised the strategic significance of these developments. 

“The effective strategy our members adopted in 2023 was aimed at augmenting the role of the riel in financial transactions and strengthening the community’s bond with the national currency. This is vital for fostering an inclusive and robust financial sector ecosystem,” she stated.

Nita commented on the impact of microfinance loans on the Cambodian economy across various sectors, including households, business, agriculture and others. 

“This specific targeted credit intervention has not only stimulated economic activity but also highlighted the crucial role of the microfinance sector in supporting Cambodia’s development,” she added.

NBC governor Chea Serey noted a substantial increase in electronic KHR transactions during a workshop marking the 44th anniversary of the riel’s introduction, focused on the future of the national currency and the blockchain-based Bakong interbank payment system at the Centre for Banking Studies in Phnom Penh. 

She stated there was a 44% increase in e-riel payment transactions in 2023 compared to 2022, surpassing the growth in US dollar (USD) e-payment transactions, which saw a mere 3.1% increase.

“The NBC has been working on integrating payment systems with neighbouring countries and the region. This allows Cambodians with riel accounts to easily make payments via QR code in these countries. We are committed to facilitating and promoting the continued use of the riel,” she said.

The central bank chief added that various measures, particularly Bakong, have played an important role in modernising, expediting and reducing the costs of payments in the local currency.

She noted that this integration allows foreign tourists to make payments via QR code at shops in Cambodia, with the transactions being processed in KHR.

Serey highlighted that the nation has also established connections with systems in Thailand, Vietnam and Laos, as well as with several international payment service providers. She said further plans are underway to expand these connections to other regional countries like China and India.

The CMA reported a substantial increase in KHR transactions through the Bakong system, which have grown 3.4 times compared to the increase in USD transactions. It said the trend underscores the success of the national currency.

According to the association, the surge in usage indicates a collective effort to enhance the role of the riel as a medium for commodity exchange, bridging the gap between digital and traditional commerce and clearly demonstrates the country’s progression towards financial and economic sustainability.

The Cambodian microfinance sector has emerged as a crucial contributor to the national economy, playing a key role in the remarkable growth in KHR usage in 2023.

Under the guidance of the central bank, members of the association have made significant progress in bolstering the usage of the local currency. This effort has strengthened the role and resilience of the riel in Cambodia’s economic structure, as per the CMA.