Bank Deposits Get Protection

[geovalin]

The Kingdom’s central bank ‒ the National Bank of Cambodia (NBC) ‒ is working closely with experts from the US Treasury to set up a depositors’ protection scheme among banks in the country. This move was welcomed by the country’s banking industry with CEOs saying it was urgently needed for financial stability due to lack of a deposit insurance system to protect customers. Vilma Rosa Leon York, an expert on deposit guarantee schemes from the US Treasury, met with NBC Governor Chea Chanto last week to report on the progress of a study to protect deposits in the country’s banks, according to a short statement issued by the NBC.

Depositors’ protection schemes reimburse a limited number of deposits to depositors whose bank has failed. From a depositor’s point of view, this protects a part of their wealth from bank failures. From a national financial stability perspective, this promise prevents depositors making panic withdrawals, thereby preventing severe economic consequences. In Channy, president and group CEO of Acleda Bank, applauded the NBC move and said it would make the banking sector stronger.

“It is a good move by the national regulator to build more trust from the public in our financial sector. It will protect the depositor ‒ for instance, if any banks or financial institutions become bankrupt,” Mr. Channy told Khmer Times. Stephen Higgins, managing partner of the financial research firm Mekong Strategic Partners, said Cambodia was the only country in Asean without mandatory deposit insurance to be taken out by banks, with the exception of Myanmar whose financial system is still at the fledgling stage.

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