National Bank of Cambodia (NBC) director-general Chea Serey on Thursday stressed that small-denomination US banknotes will remain valid and legal tender in the Cambodian market.
This comes after Japanese-owned shopping mall developer Aeon Mall (Cambodia) Co Ltd announced its decision to stop dispensing $1, $5 and $10 notes from August 1 at its establishments.
Aeon Mall Cambodia said: “We would like to inform valued customers that from August 1 onward, our shopping centres will no longer hand out notes in $1, $5 and $10 denominations and that change will be converted into Cambodian riel.
“We stress that our shopping centres will continue to accept [small-denomination] US-dollar [banknotes] from customers that purchase merchandise in our stores until further notice.”
Serey played down the move, saying it was apparently intended to promote the local currency.
“We cannot force them to hand out small-change banknotes – they should be able to pay with whatever notes they stock. But it is crucial that we continue to promote the wide use of the riel.
“The Japanese have by and large backed the Cambodian currency – undertaking studies on the use of the riel in the Kingdom through Jica [Japan International Cooperation Agency], only accepting riel for visa payments to the Japanese embassy through Aeon Specialised Bank [Cambodia] Plc, and even being the first to include parallel riel prices at its supermarkets in Cambodia,” she said.
However, Serey said financial institutions will be held accountable if they stop accepting valid notes.
Citing Article 64 of the Law on the Organisation and Function of the NBC promulgated in 1996, she said: “Any person who does not accept payment in a currency that is legal tender in the Kingdom shall be liable for a fine of 100 times the amount of the payment.”
Local entrepreneur and public-private partnership advocate Van David urged the NBC to do more to promote de-dollarisation.
“Ultimately, such gradual de-dollarisation of the economy is needed to enhance the usage of the local currency.
“The NBC should encourage the public to make use of existing mobile banking apps to enhance digital banking and save money and time for banks and merchants,” he said.
NBC set a three-month deadline for banks and microfinance institutions starting June 1 until August 31 to take all $1, $2 and $5 to the NBC for transport abroad without a service fee.
Financial institutions will be charged after the deadline. The central bank said the move was to avoid flooding its stockpile as demand for the notes is low. But it sparked a reaction from the public who feared the notes will not be accepted further as legal tender.
Prime Minister Hun Sen then clarified two days later that the smaller notes remain acceptable as normal.
“I want to confirm to the Cambodian people that small US banknotes are still widely used and accepted across the country,” he said.
Say Sony, senior vice-president of Prasac Microfinance Institution Ltd (Prasac) – the Kingdom’s largest microfinance deposit-taking institution (MDI) in term of total assets – said his organisation accepts smaller banknotes as usual. However, he noted that the use of the notes by customers is declining.
“We keep accepting these small banknotes and we don’t see any problem related to the collection because we can replace them with our KHR banknotes for small exchanges. This is a great move towards de-dollarisation,” he said.