Thailand
Cambodia: Empowering the Riel
Juxtaposing the prominent use of dollars by more high-end and modern establishments, go to any streetside stall or market and a patron would be more likely to see colourful riel notes pass from one hand to the next. Purchase anything in the commonplace businesses with dollars and a person will likely get their change back in riels
Empowering the riel into international recognition is a daunting challenge, especially when comparing it to the great currency monoliths of economies such as the US dollar, Chinese Yuan and the Euro. Strengthening the riel and shifting the mindset of Cambodians into using their own currency would take tremendous efforts due to a lasting legacy of the United Nations Transitional Authority in Cambodia (UNTAC) and an almost-crippling dependency on the dollar in daily life.
In a landscape where cash is king, a country’s currency is closely tied with its people’s national identity and economic power. Cambodia’s dual currencies of Riel and US dollar, put it in a small group of countries that employ the same dual currency system; setting it apart from its close neighbours and somehow making it lost in the world traffic of currencies.
The use of the dollar is well established in Cambodia and is pervasive in the corporate world. Salaries are most frequently paid in dollars; banks frequently undertake transactions and take deposits in dollars and major corporations invest in dollars. This mainstream use of the US currency in Cambodian society has carved a place for the dollar in the country’s economic identity.
The ubiquitous usage of the dollar has both extrinsic and intrinsic impetuses behind it. One of the main reasons for the use of dollars is the ease of transaction and bookkeeping. When asked, many cashiers said that they prefer to transact with the dollar due to the ease of calculations. Most people who work in more modernised stores and restaurants prefer the use of dollars in transactions simply because of its pragmatism.
The use of dollars also plays an important role in international trade for the country. Most exports and imports are quantified in dollars, although the prices of gasoline in the country are in riels but pegged against the dollar which is the official import price.
The use of dollars is also entrenched in the mentality of the people of Cambodia. Intrinsically the dollar carries more value for people due to the perceived and real-life prestige of the dollar. The use of dollars carries the connotation of wealth for many people. Cambodians do not see the elites and people occupying the upper economic echelons of the country as millionaires in terms of Cambodian riels but as millionaires in terms of dollars.
Widespread use of the dollar carries economic negative repercussions, namely: loss of seigniorage, lower international reserves, loss of monetary policy autonomy and loss of lender-of-last-resort function.
Juxtaposing the more prominent use of dollars by more high-end and modern establishments, go to any streetside stall or market and a patron would be more likely to see colourful riel notes pass from one hand to the next. Purchase anything in the more commonplace businesses with dollars and a person will likely get their change back in riels.
Establishing a more riel-dependent economy would allow the national currency to gain more legitimacy on the national stage and eventually, on the world stage. By tying the riel to the national identity, one could argue that promotion of its use is the promotion of Cambodian culture and heritage.
The use of the riel would allow the Cambodian government to earn extra revenue through seigniorage. Seigniorage revenue is the profits amounting to the difference between the value of money and the cost of printing it. Cambodia has relatively low seigniorage revenue due to the massive circulation of foreign currencies in the country.
A strong riel would also carry an image of a strong national economy and self-sufficiency. By encouraging a more widespread use and increased dependency on the riel, Cambodia can send a message of self-sufficiency by showing that its currency’s purchasing power is strong.
Putting the riel on a pedestal and empowering the currency is an important step towards pushing the further development of the national economic system and purchasing power. It is a path for the Cambodian riel to one day stand together with currencies within the ASEAN or ASEAN+3 region. Strengthening the riel is one way of shedding the past dependency and moving towards the future of self-sufficiency. One day when the riel is strong, Cambodian people can proudly pull out the colourful banknotes and be secure in the power of the riel.
Source: https://www.khmertimeskh.com/501046169/empowering-the-riel-2/