An opposition spokesman said on Sunday that if the CNRP won next year’s national elections, all transactions in the country would be in Khmer riel within one year—a huge reversal of the current situation, in which 84 percent of transactions use the U.S. dollar, according to National Bank of Cambodia (NBC) statistics.
While saying it was “very technical” and declining to discuss details, CNRP spokesman Yim Sovann said on Sunday that the opposition would implement a strategy to completely transition away from U.S. dollars in transactions within its first year in power.
“Just one thing that makes it easy for the people to understand…is that all transactions must be done in Khmer riel,” Mr. Sovann said on Sunday, adding that Cambodia would follow the examples of neighboring countries that use their own currencies for transactions.
The NBC has also been critical of the economy’s heavy dollarization, though it has taken a more conservative approach to addressing the problem.
An August report from the central bank noted progress in promoting increased riel usage, but estimated that 84 percent of the country’s transactions were still done in U.S. dollars. More recently, the bank’s director-general, Chea Serey, said on Wednesday that the widespread dollar use was limiting the bank’s ability to enact monetary reforms.
The CNRP’s one-year deadline is a significant acceleration of the current NBC strategy, which has focused more on promoting riel usage through methods including raising public awareness, stabilizing exchange rates and collecting taxes in riel.
The task of de-dollarization may prove difficult, according to a study published by Hitotsubashi University in Tokyo in January.
The report focuses on large- and small-scale use of U.S. dollars in Cambodia’s economy, and finds “revenues, expenditures and price quotations are…highly dollarized in Cambodian firms.”
Stephen Higgins, a managing partner at investment advisory firm Mekong Strategic Partners, said in an email on Sunday that he was supportive of the NBC’s de-dollarization strategy, though he said he thought the process would likely take a generation to complete.
“I think the NBC is certainly pushing harder in their efforts to promote the Riel, but it is still going to take a long time for the Riel to overtake the dollar in Cambodia,” Mr. Higgins said. “To successfully de-dollarize, you need to establish a really strong base for the Riel and build confidence in it, and the NBC is very conscious of that.”