A National Bank of Cambodia (NBC) official on Sunday clarified that a recently signed agreement over transactions in the Chinese currency the yuan only applies to banking and financial institutions, not daily transactions with individuals.
The explanation came after a series of reports regarding the signing of a memorandum of understanding (MoU) between the Bank of China and the Cambodian Ministry of Tourism. The MoU intended to facilitate the establishment of electronic payment systems such as Union Pay, WeChat Pay and Alipay in the Kingdom’s hotels, restaurants and travel agencies.
Reports of the MoU on some websites contributed to the mistaken belief that the ministry was allowing the use of the yuan to pay for daily goods in Cambodia in the same way as the US dollar, said an official speaking on behalf of NBC director-general Chea Serey.
According to the official, Serey said allowing the use of the yuan for cross-border commerce and as digital payment did not mean NBC wants to push for the Chinese currency’s use in retail business transactions in the Kingdom.
She added that the MoU simply means that the yuan will be introduced in the banking system which would not allow for it to circulate for goods purchases – like the US dollar and the riel.
“It’d be a worrisome matter if the Chinese yuan were to be used directly for settlements in the market. If so, we’d merely switch from the dollar to the Chinese yuan,” she was quoted as saying.
‘Do not panic’
She emphasised that allowing the use of the yuan for cross-border trade does not imply compulsory yuan-denominated transactions in daily transactions. It is only for Cambodian and Chinese companies that do business with each other to make direct payments directly in either yuan or riel through the banking system.
“When the money [yuan] comes under the banking system, do not panic. The management is accurate and also clear,” the official quoted Serey as saying.
Allowing the use of yuan through Union Pay, Alipay and WeChat is similar to the agreement between NBC and the central bank of Thailand, which are both working on a new electronic payment system based on QR codes that will allow citizens of one country to shop in the other using their own currency.
However, the decision does not allow people to use foreign currencies in cash, with payment done via the scanning of QR codes, with the amount deducted through bank accounts.
Acleda president and CEO In Channy on Sunday said people should not be worried about NBC’s authorisation of yuan in the banking system, as the provision does not mean that the Chinese currency will be used in daily business as the riel and dollar currently are.
“In fact, this decision is pushing the growth of international trade and it is also part of promoting the use of the national currency as an alternative for international trade payments,” he said.