Cambodia's Dollarization Challenge: Managing US Liquidity under Market Volatility
Cambodia's banking system is facing challenges in managing its US dollar liquidity due to high levels of dollarization, according to a recent analysis by the ASEAN+3 Macroeconomic Research Office (AMRO).
The country stands out among ASEAN+3 member economies for its high degree of dollarization, with 83.4% of broad money denominated in US dollars at end-2025.
While dollarization has facilitated financial transactions, trade and investment, it also requires banks to meet liquidity demand in both US dollars and Cambodian riel. The National Bank of Cambodia (NBC) faces constraints in supplying US dollars as a lender of last resort due to its limited ability to issue the currency predominantly used in the economy.
The AMRO analysis found that banks' US dollar liquidity buffers held at the NBC have gradually declined since 2021, while banks have increased their overseas assets. The high level of nonperforming loans adds to the challenge, reducing interest and principal repayments and weakening banks' cash inflows.