Seminar to Celebrate the Publication of “Cambodian Dollarization: Its Policy Implications for LDCs’ Financial Development”

On Nov. 10, 2023, the National Bank of Cambodia (NBC) and the JICA Ogata Sadako Research Institute for Peace and Development (JICA Ogata Research Institute) jointly hosted a book launch seminar at a hotel in Phnom Penh, Cambodia.

This event was held to celebrate the publication of Cambodian Dollarization: Its Policy Implications for LDCs’ Financial Development from Routledge, as a deliverable of the Empirical Study on the Promotion of Home Currency in Cambodia Project by JICA Ogata Research Institute. It was published in English in September 2023 and was edited by Okuda Hidenobu, visiting fellow, JICA Ogata Research Institute (also a professor at Teikyo University), and Chea Serey, governor of NBC. This is the first ever academic book that comprehensively shows the reality and mechanism of dollarization in Cambodia, a country which has achieved rapid economic and financial progress in recent years.

The seminar gained a lot of attention and in addition to about 150 officials from relevant Cambodian ministries and universities who came to the venue, around 700 participants joined online.

The seminar opened with remarks from Sanui Kazumasa, chief representative, JICA Cambodia Office, and Chea Serey, governor, NBC. Sanui expressed his gratitude to NBC, JICA Ogata Research Institute and the researchers who were involved in the joint research work spanning approximately 10 years for their great contribution. Chea explained the current state of dollarization in Cambodia and based on the instability caused by dollarization during the COVID-19 pandemic, she commented on the importance of promoting the country’s home currency.

Next, Okuda presented on the background of the publication of the new book, noteworthy contributions and future research prospects. He explained the following: the data used in this book were collected through the first ever large-scale survey on dollarization, which was conducted by NBC and JICA and covered all provinces of Cambodia; the survey revealed that dollarization in Cambodia is not a simple phenomenon as previously believed but rather, depending on how you look at it, it can be seen as having various different mechanisms; and the book provides specific policy recommendations toward the expanded use of the riel (home currency of Cambodia) that take the reality of dollarization in Cambodia into account. As an example of these policy recommendations, Okuda said that a financial system that assumes riel usage needs to be established to promote the use of riel because dollarization in Cambodia is interlinked with the development of the country’s financial system and the more the system advances, the more the US dollar becomes used. He also noted that Cambodia’s experience is offering valuable information to many developing countries facing similar issues.

Presentations by authors of three chapters in the book followed: Aiba Daiju, visiting fellow, JICA Ogata Research Institute (also a JICA Expert), on the chapter on dollarization in households; Lay Sok Heng, director, Economic Research and International Cooperation Department, NBC, on the chapter on dollarization in companies; and Chey Sovvaney, deputy director, Economic Research and International Cooperation Department, NBC, on the chapter on dollarization in financial institutions. In the Q&A session, there was a question on dollarization experience in other countries. Aiba commented that based on what has been experienced in other countries, he can say that de-dollarization should be carefully implemented and that it is important to establish financial infrastructure that is based on the home currency.

Michel Dabadie, director, Center for Banking Studies, NBC, served as the moderator in the final panel session. The following people served as panelists: Khou Vouthy, deputy director general, Central Banking Directorate, NBC; Sovannroeun Samreth, visiting fellow, JICA Ogata Research Institute (also an associate professor at Saitama University); Nizamuddin Arshad, resident advisor, International Monetary Fund (IMF); and In Channy, director, ACLEDA Bank. The panel discussed issues caused by dollarization and the challenges in de-dollarization. Khou noted that dollarization in Cambodia is limited, mainly exclusive to urban areas and even there, a gradual shift from the US dollar to the riel is occurring. Arshad pointed out that many households and companies are receiving loans in foreign currencies without owning assets based on them and this poses a huge risk should a financial crisis occur.

The seminar was featured in numerous local media outlets including the Khmer Times, Phnom Penh Post and Fresh News. Some of these can be viewed from the links provided below.