Over the past decade, Cambodia has become Asia’s most dollarized economy. In contrast, dollarization in neighboring Lao P.D.R., Mongolia. Cambodia economic and politic problems still fuel dollarization existence. Next issue is to discuss the advantage and disadvantage in. Advantages and disadvantages of dollarization by kyial. Dollarization in cambodia hidenobu okuda this project intends to investigate the effects of dollarization.

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Cambodia has spent several costs associated with dollarization, including loss of monetary policy and loss of seigniorage. Staff urged the authorities to take advantage of the decline in international oil prices to eliminate remaining fuel subsidies, which should yield 1.

For example, the human resource of the country was killed. Chang argues that in cases where policy credibility has been a problem, interpreting seigniorage loss becomes delicate. You are commenting using your Facebook account.

It is unclear that these conditions can be replicated, especially since the initial level of dollarization was not too high in these two countries.

They therefore need a currency that is stable such as the U. And more major three strategies as well as: Expenditures and Perils of Dollarization The financial authority has lost the lender of last resort and lacks instruments to influence monetary aggregates and anchor private sector expectations of inflation.

Dollarization in Cambodia – Lady SAM

Her father, advangage chanto, is the governor of the national bank of cambodia. Boyd, Levine, and Smith argue that this correlation may in large in part operate through the deleterious effects of inflation on financial markets. In these cases, the increase in dollarization could in fact have been associated with an increase in social welfare provided, which would otherwise not have been realized if dollarization had not taken place.


This resulted in a sharp devaluation of the riel and in a three-digit hyperinflation which advaantage additional shocks for potential users of the riel.

Moreover,Cambodia should strongly concentrate on the financial literature to people and promote the people to know how the advantage and disadvantage of using dollars.

Somewhat paradoxically, growing dollarization in Cambodia has occurred against the backdrop of greater macroeconomic and political stability.

Dollarization: The Advantage And Disadvantage Of Dollarization

Disadvantaye system was automatically destroyed while some financial institutions closed and crushed down. Dollarization, De-dollarization, SeigniorageDilemma, Cambodia 1. The actions taken by the inclusive government to end the. Financial literature and promotion of disadvantage in using the dollars to people are very useful. A crosscountry perspective, may nicholas staines, imf may 2.

After years of deprivation at the hands of the khmer rouge. The commercial transactions were made up by barters or rice and gold or even other currency. The disadvantage of Dollarization Dollarization in economy will be having the good and bad dollarizatino for Cambodia.

Both Poland and Israel implemented successful disinflation programs, built on a strong exchange rate anchor.

Advantage and disadvantage of dollarization in cambodia pdf

When the cost of producing money exceeds is below its value, seigniorage is negative positive. Until then, using unproductive physical assets such as gold was common practice in Cambodia.


Riel currency needs to be encouraged to use in the market. Also, indirect credit risk might increase in case of devaluations in the presence of substantial dollar lending to non hedged borrowers Kokenyne, Ley, and Veyrune, This drop reflected reductions in net claims on banks of KHR 70 billion Costs and benefits of dollarization federal reserve bank. In these reasons ,The counter cyclical fiscal policy in public investments should be major tools beside from the monetary policy.

By continuing to use this website, you agree to their use. Chart 4- Interest on loan and Deposit 6months weighted average ,Source: The second problem is about the loss of seigniorage revenue.

Advantages and disadvantages of dollarization by Kyial Bakytbek kyzy on Prezi

Certainly, cambodia does appear to have the capacity to sustain a local currency, but after years of inflation and conflagration, the national bank of cambodia is once again trying to reassert influence over the economy, as a lender of last resort and a source of liquidity.

We have for some time lived in a world where foreign and domestic markets have been tightly integrated and where U. The pros and cons of full dollarization wp created date. Although the official currency is the cambodian riel, the usd is used congruently, and can be used in any transaction.