PRASAC Micro Finance Institution – one of the country’s leading MFIs – has already collected around $1.2 million in small US dollar banknotes, according to a senior official.
PRASAC’s Executive Vice-President and Chief Marketing Officer Say Sony told Khmer Times yesterday that as of this week, PRASAC has collected the bank notes from 180 counters nationwide, derived mostly from clients and borrowers.
The collection of the currency is in response to the National Bank of Cambodia (NBC)’s request on May 28 that all commercial banks and microfinance institutions send in the small banknotes because it considers them difficult to manage and “there is little demand for them”. The NBC said it will give a three-month deadline (June 1 to Aug 31) for all commercial banks and microfinance institutions to collect $1, $2 and $5 bills so they can transport them to a foreign country.
Sony said, that because the bank helps reduce the use of $1, $2 and $5 US banknotes, the circulation of riels is now also increasing.
“I can see the positive impacts of the move by the NBC, as the equivalent of Khmer riel notes are now quickly replacing those small US banknotes. In the longer term, the use of Khmer riels will increase to a great extent,” he said.
Sony hopes that by promoting the use of riels, it will also boost digital payment in the local currency because most are made using US dollars. “Through the NBC’s e-payment initiatives such as Bakong and the Fast Service and Cambodian Shared Switch, this will enable our clients to conduct transaction easier in riels. It will also increase the number of transaction as well as the amount in riels in the market,” he said.
The NBC says the move is also part of its de-dollarisation agenda, which is designed to help strengthen the independence of monetary policy and contribute to economic growth and efficiency.
The central bank added that Cambodia must push the use of its riels, starting with small transactions. Hence, removing small US dollar banknotes will further promote the local currency.