N EW currency, to be circulated by the National Bank of Cambodia (NBC) before the end of the year, will not eliminate the US dollar, said a leading economist.
New notes will appear in denominations of 1,000, 2,000, 5,000, 10,000, 20,000, 50,000 and 100,000 riels. Coins will replace notes of 50, 100, 200 and 500 riels. However the economist predicted that the use of the dollar will diminish only insofar as the larger denomination riel notes will be less cumbersome than hitherto. He said that until political stability exists, people will continue to trust the stable purchasing power of the dollar more than the riel.
The economist, who declined to be named, said the situation was comparable to eastern Europe where the Swiss franc and Deutsche mark are widely used because of huge inflation. "In Cambodia, where inflation is about 20 percent, people hold the dollar as it won't lose value," he explained.
An NBC spokesman said the bank had decided against taking the opportunity of the new currency to knock one or two zeroes off notes. This would have enabled large transactions of riels to be made in more managable figures.
But the spokesman said most Cambodians were not yet sufficiently educated to accept such wholesale changes.
The spokesman said:"It is too problematic in terms of public budget, accountancy, balance sheets, stocks and pricing. There is still insufficient education here, and illiteracy. In France, where the denomination of the franc was reduced from 100 to 1, people are still talking in old francs more than 40 years later. In Italy, for example, they decided against reducing the lira. Many other countries, such as Indonesia, Vietnam, Russia and Poland, still count their money in denominations of 100s and 1,000s.
The actual amount of money in circulation will not change. Initial supplies will amount to approximately 15.2 billion riels, to be exchanged with existing stocks in the Treasury. Special centres, to be set up by the Bank in February or March,1995, will supervise the exchange.
New notes and coins will circulate simultaneously with old notes, which will be gradually phased out, but will continue to be legal tender indefinitely. The creation of the new currency, still to be finalised, is part of the country's move towards becoming a full market economy. The Governor of the Bank, Thor Peng Leath, will hold a press conference in the next few days to confirm details. The NBC spokesman emphasised that the new currency will not change the value of money in any way.
"The changeover will not have any effect on prices, goods or services," he said. The coins and notes are being produced in France and shipped here with the $1.6 million cost being covered by a French grant. The NBC is hoping they would arrive in time for Nov 9, Independence Day. Naturally the new currency will bear the words "Kingdom of Cambodia" rather than "State of Cambodia"