The National Bank of Cambodia (NBC) is cooperating with counterpart institutions in Thailand and Vietnam to expand the use of local currencies in cross-border trade and limit the use of the US dollar in regional transactions.
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NBC director general Chea Serey, speaking during a conference on the promotion of the yuan and the riel in cross-border trade this week, said they are working with the central banks of Thailand and Vietnam to promote the use of local currencies in trade settlements between Asean nations and enhance region-wide recognition of the riel as legal tender.
“The objective is to use local currencies more often in cross-border transactions to increase acceptance of the riel regionally. The idea is we use their money and they use ours,” Ms Serey said.
On Tuesday, NBC and the People’s Bank of China (PBC) urged investors and traders to use the yuan and the riel in transactions involving both nations.
Last month, the yuan-riel exchange rate was officially launched during the China-Asean Expo in Nanning, China.
“Currently, we depend on five currencies, the US dollar, the euro, the Japanese yen, the British pound and the Chinese yuan,” Ms Serey explained.
“But the US dollar is the one dominating our economy, so if there are any issues with this currency, Cambodia will suffer the consequences as well. We have to diversify our currency use.”
Ms Serey called on businesses to help with NBC’s plans to promote the local currency.
“If the private sector does not value their own currency, other countries will certainly not value it either. It all starts with the private sector,” she said.
“If we don’t use the riel, we lose control of our monetary policy.”
Lim Heng, the vice-president of the Cambodia Chamber of Commerce (CCC), said he supports NBC’s policy towards the riel.
“We want the recognition of the riel in the Asean region. We want to be able to do trade in riel in order to stabilise our currency,” Mr Heng said.
Kouch Pheng, the president of Young Entrepreneurs Association of Cambodia (YEAC) and Advanced Glory Logistics, told Khmer Times that expanding the use of the riel will be easier as Asean integration continues.
“Currently, for cross-border transactions on trade and investment, the dollar is disproportionately dominant, but this will change with Asean integration,” Mr Pheng said.
“YEAC promotes the use of the riel and our members use riel for staff payroll and other operations,” he added.