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Dollarization and macroeconomic performance in Cambodia since the first 1993 general election

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  • Chanthol Hay

Abstract

This paper provides historical backgrounds of dollarization, the introduction of the Khmer riel and macroeconomic performance in the context of high dollarization after the Khmer Rouge regime which ended in year 1979. The high level of dollarization was caused by both economic and political factors. The history of large exchange rate depreciation and high inflation, trust in new local currency (which was abolished during the Khmer Rouge), political unrests, spending in U.S. dollars by international organizations for running elections, are among those factors. Macroeconomic environment was favourable as low inflation, stable exchange rate against U.S. dollar and high rate of GDP growth were achieved recently. Policy to gradually de-dollarize the economy is in place. However, dollarization cannot cushion Cambodian economy against recent global economic shocks such as global financial crisis in 2008 and Covid-19. A more active dedollarization policy shall be considered.

Suggested Citation

  • Chanthol Hay, 2021. "Dollarization and macroeconomic performance in Cambodia since the first 1993 general election," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 10(2), pages 27-46, March.
    • Handle: RePEc:rbs:ijfbss:v:10:y:2021:i:2:id:1179
    DOI: 10.20525/ijfbs.v10i2.1179
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    References listed on IDEAS

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    1. Ize, Alain & Yeyati, Eduardo Levy, 2003. "Financial dollarization," Journal of International Economics, Elsevier, vol. 59(2), pages 323-347, March.
    2. Slocomb, Margaret, 2010. "An Economic History of Cambodia in the Twentieth Century," University of Chicago Press Economics Books, University of Chicago Press, number 9789971694999, August.
    3. Jayant Menon, 2008. "Cambodia's Persistent Dollarization: Causes and Policy Options," Working Papers on Regional Economic Integration 19, Asian Development Bank.
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