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Banking Terms

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ATM: Automated Teller Machines (ATMs) are used to conduct transactions with the bank electronically. In short, ATM is cash dispenser.

ATM Card: ATM card is the card that can be used at ATMs for transactions like account balance inquiry, cash withdrawal, and other service. It is similar to the debit card since the card is directly connected to a bank account, however it cannot be used for purchasing purposes.

ASEAN Economic Community: shall be the goal of regional economic integration by 2015. AEC envisages the following key characteristics: (a) a single market and production base, (b) a highly competitive economic region, (c) a region of equitable economic development, and (d) a region fully integrated into the global economy.

Asian Development Bank: Asian Development Bank (ADB), based in Manila, Philippines, was established in 1966 to help accelerate economic and social development and dedicated to reducing poverty in Asia and the Pacific region through loan, grants, economic research, policy and technical assistance.

Balance of Payment (BOP): is a statistical statement that summarizes transactions between residents and nonresidents during a period. It consists of the current account, the capital account, and the financial account.

Broad Money: defined as the sum of the currency held by the public and all deposits held by the public with commercial bank.

The Central Bank: The entity responsible for overseeing the monetary system for a nation (or group of nations). Central banks have a wide range of responsibilities, from overseeing monetary policy to implementing specific goals such as currency stability, low inflation and full employment. Central bank also generally issue currency, function as the bank of government, regulate the credit system, oversee commercial banks, manage, exchange reserves and act as a lender of last resort.

Check: A check is an unconditional order in writing, addressed to a banker and signed by the person giving the order, requiring the banker to pay a determined sum of money to the order of a specified person or to the bearer. It must be payable at sight and conform to all requirements stated in Law on Negotiable Instruments and Payment Transactions.

Clearing House: The clearing house is a place where the representatives of the different banks meet for confirming and clearing all the checks and balances with each other. The clearing house, in most countries across the world, is managed by the central bank.

Credit Card: a card that which allows cardholder to borrow money from the bank and to buy goods up to a certain limit without paying for them immediately, but only after a period of grace of about 25-30 days.

Credit Remittance: Typically used for making payment originated by the payer to the beneficiary. Commercial banks provide credit remittance via branch, ATM, Internet, PC, and mobile.

Debit Card: A payment card that deducts money directly from a consumer’s account to pay for a purchase. It can also allow cardholders to withdraw cash from their deposit account through ATM, especially acting as the ATM card.

Direct Credit: in banking, a direct deposit (or direct credit) is a deposit of money by a payer directly into a payee’s bank account. Direct deposits are most commonly made by business in the payment of salaries and wages for the payment of suppliers’ accounts, but for facility can be used for payments for any purpose, such as payment of bills, taxes, and other government charges.

Direct Debit: a system where a customer allows a company to charge costs to his or her bank account automatically and where the amount charged can be increased or decreased with the agreement of the customer.

Electric Payment Order: Electronic payment order means an instruction given to a bank to pay or collect a specific sum of money out of a designated account, to or for a payee, or to or for a payee’s account, and includes any amendment to a payment order. It may be value-dated but not be subjected to a condition other than as the originating bank agreed to perform. Parties to a payment order are the sender and the receiving bank.

Exchange Rate: An exchange rate is a price of nation’s currency in term of another currency. An exchange rate can be quoted as follows:

- In a direct quotation: the price of a unit of foreign currency is expressed in terms of the domestic currency.
- In an indirect quotation: the price of a unit of domestic currency is expressed in terms of the foreign currency.

Foreign Exchange Reserves: are foreign currency assets held by the central bank of countries. These assets include foreign marketable securities, monetary gold, special drawing rights (SDRs) and reserve positions in the International Monetary Fund. The main purpose of holding foreign exchange reserves is to make international payments and hedge against exchange rate risk.

Inflation: is defined as a sustained increase in the general level of prices for goods and services in an economy over period of time. It is calculated in percentage and also measured as a monthly, quarterly, and annual percentage increase.

Interbank Money Market: a market where banks lend to or borrow from each other.

Interest Rate: An interest rate is the rate at which interest is paid by borrowers (debtors) for the use of money that they borrow from lenders (creditors). Interest rates are normally expressed as a percentage of the principal for a period of one year.

International Monetary Fund: an international organization created in 1945 for the purpose of promoting international financial stability and monetary cooperation; facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

Japan International Cooperation Agency: An Organization created in 2003) to contribute to the promotion of international cooperation as well as the sound development of Japanese and global economy by supporting the socioeconomic development, recovery or economic stability of developing countries.

Lender of last resort: The function of a central bank in extending credit to banks to overcome liquidity problems caused by a mismatch in funds and to prevent liquidity crisis.

Liquidity: The degree to which an asset or security can be bought or sold in the market without affecting the asset's price. Assets that can be easily bought or sold are known as liquid assets. The ability to convert an asset to cash quickly.

Microfinance Institution: An institution specializing in delivery of financial such as loan and deposits, to the, to the poor and low income households, and to micro-enterprises.

Monetary Policy: the process by which the monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency. Further goals of a monetary policy are usually to contribute to economic growth and stability, to lower unemployment, and to predict exchange rates with other currencies.

Monetary Policy Committee: a high-level policy committee at the National Bank of Cambodia, established to assess the ongoing economic and financial developments of the country and to make decisions on monetary policy, with the objective of maintaining price stability.

National Bank of Cambodia: The central bank of Cambodia.

Negotiable Certificate of Deposit: NCD is a short-term interest bearing debt issued by the central bank denominated in Khmer Riel or US Dollar with equivalent minimum amount of 2,000 million Riel.

Official Exchange Rate Determination Committee: The NBC's exchange rate is determined by the NBC's Official Exchange Rate Determination Committee, which is comprised of staff from relevant departments such as; Issue, Banking Operations, Exchange Management, Statistics, and Economic Research & International Cooperation Department

Payment card: Payment card covers a range of different cards that can be presented by a cardholder to make a payment. There are four types of payment cards; credit card, debit card, ATM card and prepaid card.

Payment System: According to the definition by the Bank for International Settlement (BIS), a payment system consists of a set of instruments, banking procedures, and typically interbank funds transfer systems that ensure the circulation of money. It is generally known as the means by which funds are transferred by the system participants. In other words, there are components related to payment systems which include (1) legal and regulatory framework issued by the relevant authorities, mainly central banks (2) institutions participating in the operation of the payment systems which consists of banks, non-bank financial institutions, non-bank providers of fund transfer services, switching companies, and even central banks (3) payment instruments and clearing and settlement mechanisms in the system, which are used to transfer the funds in order to discharge the obligation arising from economic activities.

Prakas: A regulation issued adopted by minister or central bank governor. It must conform to the Constitution and to the law or sub-decree.

Prepaid Card: Payment card means a card where the money is replenished by depositing on a virtual account related to that card, and that amount of money can be spent at any participating stores. In some cases, the card is designed exclusively for use on the Internet, and so there is no physical card. Typical applications of a prepaid card include phone cards, gift cards, and travel cards.

Price Stability: A situation in which prices in an economy don't change much over time. Price stability would mean that an economy would not experience high inflation or deflation.

Reserve Requirements: the amount of deposits that commercial bank must keep in the form of vault cash or deposits with Central Bank. Central bank is the regulator imposing reserve requirement. The main purpose of Reserve requirement is to control growth in the money supply. Central bank uses reserve requirement as a tool to control liquidity in the market. A low reserve requirement allows more money in the banking system. A high reserve requirement allows less liquidity.

Riel: The national currency of Cambodia.

Volatility: The relative rate at which the price of a security moves up and down. Volatility is found by calculating the annualized standard deviation of daily change in price. If the prices of securities move up and down rapidly over short time periods, it has high volatility. If the price almost never changes, it has low volatility.

Yield: The rate of income generated from a stock in the form of dividends, or the effective rate of interest paid on a bond, calculated by the coupon rate divided by the bonds market price. Furthermore, for any investment, yield is the annual rate of return expressed as a percentage.

World Bank Group: Five international organizations dedicated to providing financial assistance and advice to countries struggling with poverty and economic development. The World Bank generally focuses on developing third-world countries, helping them in areas such as health, education and agriculture. This bank provides loans and grants at discounted rates to these countries.