The National Bank of Cambodia (NBC) mandate that all commercial bank branches in Siem Reap province accept old or worn US dollars without charging service fees went into effect on July 22. Hong Menea
Accepting US banknotes with slight cuts or tears may soon be permitted throughout Cambodia after the National Bank of Cambodia's (NBC) pilot assessment in Siem Reap province is completed, as confirmed by Prime Minister Hun Manet.
The policy has been in effect in Siem Reap since July 22, after the NBC mandated that all commercial bank branches in the area accept old or worn US dollars without charging any fees, following complaints from local vendors to Manet in July.
In a message on social media today (August 2), the prime minister thanked banks, traders, money changers and the people of the province for supporting the central bank's new policy.
While this measure is currently applied only in Siem Reap, people from other provinces have questioned why it is limited to that area.
Responding to these concerns, Manet explained that exchanging old or torn US bills for new banknotes at the US Federal Reserve (the Fed) is the responsibility of the NBC. To implement this policy nationwide, he said it needs to be done carefully and incrementally.
Hinting at a green light for broader adoption, Manet said, "The implementation in Siem Reap is a pilot step for the NBC to evaluate and develop a specific plan before announcing this new policy across the country in the near future.”
In the meantime, Cambodia is promoting the use of the riel, particularly by replacing small dollar denominations such as the $1 and $5, by collecting these banknotes and sending them abroad.
In the first six months of 2024, the export of US dollars increased by 66% compared to the same period last year, and the import of US dollars decreased by 100%, according to the NBC report.
The report also states that the collection of small US bills at NBC headquarters and its branches nationwide increased by 37.4%, while the export of such notes abroad rose to 55.2% during the same period.
Hong Vanak, an economist at the Royal Academy of Cambodia, said accepting torn and old dollar bills would be an incentive for tourists. He noted that the Fed is not permitted to reject old or slightly damaged notes.
He suggested that the policy being implemented in Siem Reap could serve as a model for nationwide application.
He also recommended that old and torn Khmer riel notes should be treated the same as US notes, as people face similar issues with service charges when exchanging them.
Vanak noted that the dollar has long been used by people throughout the country. While promoting the local currency is beneficial, he said the dollar remains important for international trade.
