Real dollarization in Phnom Penh, Evidence from two surveys

Design of a CBDC in a Highly Dollarized Emerging Market Economy: The Case of Cambodia

“…In an earlier survey conducted in autumn 2020 in a similar manner (Hay, 2020), the use of the local currency, KHR, was mostly concentrated in small transactions. In the survey of shops in Phnom Penh, the capital city, the prices quoted in KHR are for relatively cheap items (Figure 4).…”

“…Anecdotal evidence suggests that about a similar percentage of loans are also made in USD. By the way, salaries are also mostly paid in USD by relatively large firms and foreign firms, while salaries are paid in the local currency, the KHR, for government employees and small business workers (Hay, 2020).…”

“…Prices quoted in US dollar (USD) and Khmer Riel (KHR) in shops in Phnom Penh. Source: Hay (2020). Note: The vertical line shows 4000 KHR, which is about one USD.…”

“…5 5 One of the authors of this paper, Hay, provides a thorough summary of Cambodia's de facto dollarization in his Ph.D. thesis (Hay, 2020) that was written under the supervision of the other author, Ueda. The description and figures on dollarization are largely based on the data in this thesis. …”

“…6 6 Note that there is at least one other reason on the supply side to use the Khmer Riel: the salaries of government employees are paid in Khmer Riel. In the private sector, foreign firms and big local firms pay salaries in USD, while small local firms pay in Khmer Riel (Hay, 2020). …”