Level A Collateral

Level A collateral represents the highest-quality and lowest-risk assets eligible for use in National Bank of Cambodia (NBC) monetary operations. Assets classified under Level A are characterized by high credit quality, strong liquidity, transparent pricing, and minimal credit and market risk. These assets may be accepted across a wide range of monetary operations, including standing facilities and liquidity-providing operations, subject to applicable terms and conditions.

Level A collateral shall include:

• Negotiable Certificates of Deposit (NCDs) issued by the National Bank of Cambodia; and

• Government bonds issued by the Royal Government of Cambodia.

Level A collateral is valued using market-based prices or NBC pre-determined valuation methods and is subject to standard risk-control measures, including haircuts and margining requirements, as prescribed by the NBC.

Level C Collateral

Level C collateral comprises asset types that are legally permissible under the Law on the Organization and Conduct of the National Bank of Cambodia.

Level C collateral may include:

• Bills of exchange and promissory notes drawn or issued for bona fide commercial, industrial, or agricultural purposes

• Government-guaranteed securities, where such instruments are issued and explicitly guaranteed by the Royal Government of Cambodia

• Private securities: short-term negotiable debt instruments issued by private entities, representing a claim for payment and transferable on the money market

• Private negotiable claims, including eligible money-market instruments and bankers’ claims bearing creditworthy signatures, subject to recognition and approval by the Central Bank’s Board

The acceptance of Level C collateral shall be subject to specific eligibility criteria, enhanced risk controls, and explicit authorization by the Central Bank, and shall not apply unless and until such assets are formally designated for use in monetary operations.

Haircuts Schedule

The haircut schedule sets out the percentage reductions applied to the market value of eligible collateral to mitigate financial risk arising from market and currency risks arising from monetary operations conducted by the National Bank of Cambodia. Haircuts are determined with reference to the type of collateral, residual maturity, liquidity characteristics, operation type, and currency denomination. Haircut schedules are designed to ensure that the Central Bank remains adequately protected against potential losses in the event of adverse market movements, especially during counterparty default.

Given Cambodia’s dual-currency environment, collateral denominated in foreign currency is common. However, it is subject to higher haircuts than collateral denominated in Cambodian riel (KHR) to reflect exchange-rate risk. Higher haircuts are also applied to lower-quality or less liquid assets, particularly collateral accepted under emergency or exceptional facilities. The National Bank of Cambodia may adjust haircut levels, request for additional margins, or refuse collateral in response to changing market conditions or heightened risk, especially Level C.