As the deadline draws close for commercial banks and microfinance institutions to send back smaller dollar banknotes to the National Bank of Cambodia without a service charge, businesses are seeing an increase in the use of the riel transactions with no real complaints from shoppers.
In late May the National Bank of Cambodia (NBC) asked commercial banks and microfinance institutions (MFIs) to send it the smallest US dollar banknotes because it considers them difficult to manage and “there is little demand for them”.
The NBC said it will give a threemonth deadline (June 1 to Aug 31) for all commercial banks and MFIs to collect $1, $2 and $5 bills so it can transport them to a foreign country that wants them. There would be no service charge during this period.
The banks’ regulator said after Aug 31, the NBC will transfer the cost of exporting the notes to the commercial banks and MFIs.
The central bank’s explanation for Cambodia doing this is that it will strengthen the independence of national monetary policy and contribute to efficient economic growth. It says that Cambodia must push the use of the riel widely, starting with the expense of small transactions. If it continues to let small US dollar banknotes being used in the country it will be a barrier to pushing the use of riels.
With the Aug 31 deadline drawing near and the news of shopping malls and other retail outlets now giving change to customers in riels, how do businesses and consumers alike feel about the smaller dollar banknotes gradually being replaced?
At Aeon 1 mall, Phnom Penh, change has been given to customers in riels in exchange for $1, $2 and $5 notes for the last three weeks with reports from many that there has been no real disruption since.
One shopper at the mall, Srey Roth, said: “It does not really bother me that I was given change in Cambodian money.
I always use riels anyway. I think that it is good that we are using our own currency.
Hopefully, this will strengthen Cambodian money in the future.” Smaller businesses have noticed more transactions in riels, with most street vendors commenting on seeing more of the local currency being used recently.
A street vendor, who only gave the name Chandara, selling soft drinks and cigarettes close to the Tonle Sap riverside, said: “I have seen a lot of people using Cambodian money. I think some other street vendors are a little worried about taking smaller dollars but I am OK with accepting both riels and dollars. I need to make money.”
The consequences of smaller US dollars going out of circulation remain to be seen.