|
Dollarization
in Cambodia
This
section describes the historical process underlying the emergence of
dollarization in Cambodia, and assesses the main benefits and costs
associated with dollarization.
Background
Cambodias
monetary system is characterized by a high degree of dollarization.
Dollarization is a monetary phenomenon whereby foreign currency is used
both as medium of exchange and store of value. Dollarization is commonly
twofold: currency substitution and asset substitution. Currency
substitution occurs when foreign currency is used as a means of payment.
Asset substitution occurs when foreign currency denominated assets serve
as financial assets (store of value function). Due to data limitations,
dollarization is traditionally proxied by the ratio of bank foreign
currency deposits to the broad money stock.
The
share of foreign currency deposits in broad money currently exceeds 70
per cent, making Cambodia one of the most dollarized economies (table
1.4 and charts 1.51.10). During the decade ended in 2000, foreign
currency deposits grew rapidly from $1 million in 1991 to $318 million
as of end 2000, equivalent to 1 and 68 per cent of broad money in 1991
and 2000, respectively. Foreign currency deposits at the end of 2000
were equivalent to about 66 per cent of gross official reserves.
1.4
Cambodia: Monetary Survey, December 1995June 2001
|
|
1995
Dec.
|
1996
Dec.
|
199
Dec.
|
1998
Dec.
|
1999
Dec.
|
2000
Dec
|
2001
Jun.
|
|
|
(in billions of riels, end of
period)
|
|
Net
foreign assets
|
550
|
878
|
1 172
|
1 728
|
2 019
|
2 588
|
2 807
|
|
National
Bank
|
304
|
533
|
808
|
1 425
|
1 649
|
2 102
|
2 257
|
|
Deposit
money banks
|
246
|
346
|
363
|
304
|
370
|
486
|
550
|
|
|
|
|
|
|
|
|
|
|
Net
domestic assets
|
99
|
33
|
-109
|
-498
|
-576
|
-758
|
-821
|
|
Domestic
credit
|
446
|
567
|
697
|
839
|
876
|
904
|
866
|
|
Government
(net)
|
148
|
128
|
54
|
179
|
103
|
3
|
-82
|
|
Public
enterprises
|
5
|
5
|
6
|
6
|
10
|
3
|
1
|
|
Private
sector
|
293
|
435
|
637
|
655
|
763
|
898
|
947
|
|
Other items
(net)
|
-347
|
-534
|
-805
|
-1 337
|
-1 453
|
-1 662
|
-1 687
|
|
Broad
money
|
649
|
912
|
1 063
|
1 230
|
1 443
|
1 831
|
1 985
|
|
Narrow
money
|
278
|
329
|
385
|
543
|
532
|
540
|
544
|
|
Currency in
circulation
|
251
|
300
|
356
|
509
|
490
|
495
|
510
|
|
Demand
deposits
|
27
|
29
|
29
|
34
|
42
|
45
|
35
|
|
Quasi-money
|
371
|
583
|
678
|
687
|
911
|
1 291
|
1 441
|
|
Time
deposits
|
5
|
8
|
13
|
20
|
32
|
46
|
52
|
|
Foreign
currency deposits
|
366
|
575
|
665
|
667
|
879
|
1 245
|
1 390
|
|
|
(contribution to annual growth of broad money, in per cent)
|
|
Broad
money
|
|
40.5
|
16.6
|
15.7
|
17.3
|
26.9
|
8.4
|
|
Net
foreign assets
|
|
50.6
|
32.2
|
52.4
|
23.6
|
39.5
|
16.2
|
|
Net
domestic assets
|
|
-10.2
|
-15.6
|
-36.6
|
-6.3
|
-12.6
|
-7.8
|
|
Domestic
credit
|
|
18.6
|
14.2
|
13.4
|
3.0
|
2.0
|
-2.3
|
|
Government
|
|
-3.1
|
-8.1
|
11.7
|
-6.1
|
-6.9
|
-6.7
|
|
Other
|
|
21.8
|
22.3
|
1.7
|
9.2
|
8.9
|
4.4
|
|
Other items
(net)
|
|
-28.8
|
-29.7
|
-50.1
|
-9.4
|
-14.5
|
-5.5
|
|
|
|
|
|
|
|
|
|
|
Narrow
money
|
|
7.8
|
6.1
|
14.9
|
-0.9
|
0.5
|
0.3
|
|
Of which: currency in circulation
|
|
7.5
|
6.2
|
14.4
|
-1.6
|
0.3
|
0.8
|
|
Quasi-money
|
|
32.7
|
10.5
|
0.8
|
18.2
|
26.4
|
8.2
|
|
Of which: foreign currency deposits
|
|
32.3
|
9.9
|
0.2
|
17.2
|
25.4
|
7.9
|
|
|
(in millions of U.S. dollars)
|
|
Memorandum
items:
|
|
|
|
|
|
|
|
|
Gross
official reserves a
|
182
|
234
|
262
|
390
|
422
|
484
|
530
|
|
|
(in per cent of foreign currency deposits)
|
|
|
125.6
|
110.3
|
136.1
|
221.1
|
181.4
|
152.2
|
149.7
|
|
|
(millions of U.S. dollars)
|
|
Net
official reserves b
|
110
|
164
|
197
|
323
|
349
|
411
|
441
|
|
|
(in millions of U.S. dollars)
|
|
Foreign
currency deposits
|
145
|
212
|
193
|
176
|
233
|
318
|
354
|
|
|
(in per cent of broad money)
|
|
|
56.3
|
63.1
|
62.6
|
54.2
|
60.9
|
68.0
|
70.0
|
|
Velocity
c
|
14.4
|
10.7
|
9.7
|
9.5
|
8.5
|
6.9
|
6.9
|
|
|
(in percent of GDP)
|
|
Seignorage
|
0.4
|
1.6
|
1.0
|
2.4
|
1.1
|
1.9
|
|
|
|
(in per cent of government revenue)
|
|
|
4.8
|
21.0
|
12.7
|
29.2
|
13.5
|
17.3
|
|
|
|
(riels/U.S. dollar; end-period)
|
|
Exchange
rates
|
2 526
|
2 713
|
3 452
|
3 780
|
3 775
|
3 910
|
3 920
|
|
|
(billions of
riel)
|
|
Nominal
GDP
|
7 543
|
8 325
|
9 149
|
10 531
|
11470
|
12 225
|
12 897
|
a
Foreign
assets of the National Bank of Cambodia (NBC) less unrestricted foreign
currency deposits of commercial banks held at the NBC.
b Gross
official reserves, less foreign liabilities of the National Bank of
Cambodia.
c
Nominal GDP divided by average stock of broad money.
Source:
Data provided by the Cambodian authorities and IMF staff projections.
1.5
Cambodia:
foreign currency deposits, 19912000
Data
source: Data provided by the Cambodian authorities and IMF staff
estimates.
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