Benchmark Rate
Structure of the Benchmark Rate
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Monetary Markets Department
The Monetary Markets Department (MMD) of the National Bank of Cambodia implements monetary policy, conducts market operations, and monitors liquidity conditions to support sustainable growth and price stability.
Roles and responsibilities of the Monetary Markets Department.
The Monetary Markets Department (MMD) is responsible for implementing the monetary policy of the National Bank of Cambodia. The department monitors liquidity conditions in the financial system, designs and executes monetary instruments, and supports the effectiveness of monetary transmission.
Key responsibilities include:
- Assessing liquidity needs of the banking system and proposing appropriate policy operations.
- Designing, conducting, and monitoring instruments such as LPCO, NCDs, and standing facilities.
- Managing interactions with market participants and ensuring smooth functioning of domestic money markets.
- Supporting monetary policy decision-making through market intelligence and analysis.
Structure of the Benchmark Rate
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Key tools used by MMD to manage liquidity and support monetary policy implementation.
LPCO operations are repurchase agreement (repo) transactions conducted by the National Bank of Cambodia to provide liquidity in Khmer Riel to financial institutions. The facility supports liquidity management and promotes the use of Khmer Riel in the financial system.
| Purpose | Liquidity providing in local currency. |
|---|---|
| Participants | NBCP members that have signed the Master Agreement. |
| Transaction type | Repurchase agreement (repo). |
| Currency | KHR. |
| Frequency | Weekly. |
| Tenor | 7 days, 91 days, 182 days. |
| Interest rate & allotment | Determined by the Monetary Policy Committee. |
| Mechanism | Auction. |
| Auction method | Single-price Dutch auction, competitive bids. |
| Minimum bid amount | 200,000,000 KHR. |
| Auction schedule | Every Thursday. |
| Operating process |
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| Result announcement |
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| Settlement |
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| Eligible collateral |
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| Haircut rate |
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Negotiable Certificate of Deposit (NCD) is a central bank bills issued by the National Bank of Cambodia that act as a monetary instrument to absorb liquidity from the banking system and is a financial instrument that is regarded as low-risk collateral. NCD is traded in secondary markets and are highly liquidity.They can be used as collateral for transactions, such as interbank lending or operations with the National Bank of Cambodia, including Liquidity Providing Collateralized Operation (LPCO), Marginal Lending Facility (MLF).
| Purpose | Liquidity absorption. |
|---|---|
| Eligible Counterparties | NBCP members. Financial Institutions that obtained license from the NBC can apply to be NBCP members. |
| Transaction type | Central bank bill |
| Currency | KHR And USD |
| tenor |
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| Interest rate and allotment | Announce weekly by auction Committee |
| Mechanism | Auction. |
| Auction method |
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| Auction Per Unit |
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| Auction schedule |
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| Operating process | Auction process through NBCP Session open from 8am to 11PM |
| Result announcement | Same day At 2:00PM |
| Settlement | T+1 |
The Marginal Lending Facility (MLF) provides short-term liquidity needs to financial institutions at moment of needs with a fixed interest rate and has one day maturity, which can be extended upon request. The MLF is operated every business day which facilitates the efficient management of liquidity in KHR. The amount provided is based on the request and depends on the collaterals. The collaterals are negotiable certificates of deposit (NCDs) or government bonds.
| Purpose | Liquidity Injection. |
|---|---|
| Eligible Counterparties | NBCP members. Financial Institutions that obtained license from the NBC can apply to be NBCP members. |
| Transaction type | Standing facilities |
| Currency | KHR |
| maturity |
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| Interest rate | Decided by the Monetary Policy Committee |
| Mechanism | On-demand |
| Minimum Request Amount | No |
| Maximum request amount | Based on collateral value |
| Schedule and frequency of operations | Twice daily | Operating process |
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| Eligible Collateral |
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| Hair Cut |
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Within the framework of open market operations, Repurchase agreements, or credit transactions with financial institutions, National Bank of Cambodia conducts its operations by buying and selling government securities in the secondary markets.
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