1182 dollarization in cambodia case promote riel and de dollarization master luận văn TCNH mary menda đoàn thanh hà supervisor tp HCM đh NH HCM 2020 vi

MINISTRY OF EDUCATION THE STATE BANK OF VIETNAM AND TRAINING BANKING UNIVERSITY HO CHI MINH MARY MENDA DOLLARIZATION IN CAMBODIA CASE PROMOTE RIEL AND DE-DOLLARIZATION MAJOR: BANKING AND FINANCE MAJOR CODE: 34 02 01 MASTER THESIS SUPERVISOR: ASSO.PROF.DR ĐOÀN THANH HÀ HO CHI MINH CITY - YEAR 2020 CONTENTS ABSTRACT i RESEARCH GUARANTEE iii ACKNOWLEDGMENTS iv TABLE OF CONTENTS .v LIST OF TABLES vii LIST OF FIGURES vii LIST OF ABBREVIATIONS viii INTRODUCTION Reason to choose a topic Research objectives 2.1 Overall objective 2.2 Specific objectives Research questions Research Methodology The structure of the thesis CHAPTER LITERATURE REVIEW 1.1 The concept of dollarization 1.2 Dollarization classification 1.3 The method of measuring the degree of dollarization 1.4 The causes of dollarization 11 1.5 The effects of dollarization on the economy 12 1.5.1 Positive impact 12 1.5.2 Negative impact 13 1.6 International Experiences 14 1.7 Summary Chapter 16 CHAPTER CURRENT SITUATION OF DOLLARIZATION OF THE ECONOMY IN CAMBODIA 2.1 Analyze the current situation of dollarization in Cambodia 2000-2019 .18 2.1.1 The situation of dollarization of the economy in Cambodia 18 2.1.2 The causes of dollarization in Cambodia 28 2.1.2.1 People's faith in the Riel 32 2.1.2.2 Measuring Dollarization in Cambodia 35 2.1.2.3.Foreign exchange control 42 2.2 The impact of dollarization on the Cambodian economy 43 2.2.1 Positive impact 44 2.2.2 Negative impact 46 2.3 Summary Chapter 48 CHAPTER SOLUTIONS TO OVERCOME THE DOLLARIZATION SITUATION IN CAMBODIA 3.1 The Cambodian government's view of dollarizing the economy 49 3.2 Solutions to overcome the dollarization of the Cambodian economy 51 3.2.1 Riel empowering 51 3.2.2 Interest rate policy 52 3.2.3 Foreign exchange management policy 52 3.3 Proposals to regulatory agencies 53 3.4 Summary Chapter 56 CONCLUSION 58 RECOMMENDATION .59 REFERENCES i ABSTRACT THESIS Title: Dollarization in the Cambodia case promotes riel and de-dollarization Abstract: Dollarization occurs when residents of a country extensively use foreign currency alongside or instead of the domestic currency Dollarization can occur unofficially, without formal legal approval, or it can be official, as when a country ceases to issue a domestic currency and uses only foreign currency Dollarization emerged spontaneously in Cambodia, because public confidence in the riel eroded, following a series of shocks that ranged from the destruction of all infrastructures by the Khmers Rouges to the subsequent mismanagement of the economy The lack of public confidence in institutions and in the banking system remains high and dollarization is still in progress, in spite of recent improvements in macroeconomic stability and of measures taken by the authorities to restore confidence If this trend continues, the country may eventually become fully dollarized No harsh action should certainly be taken against the use of the dollar However, there is a need to build up a consensus on how to promote the use of the national currency There are two priorities Cambodia needs to in the next 5-10 years The first priority is developing a comprehensive plan to promote Riel and de-dollarization Such a plan would need to be developed by relevant authorities, who would be responsible for the implementation The second priority is the establishment of a task force that has sufficient capacity to respond to the market’s reactions when the de-dollarization plan is enforced From the experience of countries that have attempted to de-dollarize their economies, the success or failure depends very much on whether the market looks at the plan and the authority who implements the plan that is credible or not Therefore, stronger efforts need to be made to build the capacities of relevant institutions that would be responsible for the formulation and implementation of the de-dollarization plan This paper is one step in that direction Keywords: Dollarization, De-dollarization, Riel, Khmers Rouges i LUẬN VĂN TÓM TẮT Tiêu đề: Đơ la hóa trường hợp Campuchia thúc đẩy đồng riel phi la hóa Tóm tắt: Đơ la hóa xảy cư dân quốc gia s dụng rộng rãi ngoại t ệ v ới ho ặc thay nội tệ Đơ la hóa xảy khơng thức, khơng có chấp thuận pháp lý thức thức, quốc gia ngừng phát hành nội tệ sử dụng ngoại tệ Đô la hóa lên cách tự phát Campuchia, niềm tin công chúng vào đồng riel bị xói mịn, sau loạt cú sốc từ việc phá hủy tất sở hạ tầng Khmers Rouge dẫn đến quản lý yếu kinh tế sau Sự thiếu tin tưởng công chúng vào tổ chức hệ thống ngân hàng mức cao tình trạng la hóa diễn ra, Bất chấp nh ững cải thi ện g ần v ề ổn đ ịnh kinh tế vĩ mơ biện pháp mà quyền thực để khôi phục niềm tin Nếu xu hướng tiếp tục, đất nước cuối trở thành la hóa hồn tồn Chắc chắn khơng nên thực hành động khắc nghiệt chống l ại vi ệc s d ụng đ ồng đô la Tuy nhiên, cần phải xây dựng đồng thuận cách th ức thúc đẩy vi ệc s d ụng đ ồng tiền quốc gia Có hai ưu tiên Campuchia cần thực 5-10 năm tới Ưu tiên phát triển kế hoạch toàn diện để thúc đẩy Riel phi la hóa Một kế hoạch v ậy s ẽ cần phát triển quan có liên quan, người chịu trách nhiệm th ực Ưu tiên thứ hai thành lập lực lượng đặc nhiệm có đủ lực để đối phó với phản ứng thị trường kế hoạch phi la hóa thực thi Theo kinh nghiệm nước nỗ lực phi la hóa n ền kinh t ế c h ọ, thành công hay thất bại phụ thuộc nhiều vào việc thị trường nhìn vào kế hoạch quan thực kế hoạch có đáng tin cậy hay khơng Do đó, cần phải có nỗ lực mạnh mẽ để xây dựng lực tổ chức có liên quan chịu trách nhiệm xây d ựng th ực kế hoạch phi la hóa Bài báo bước theo hướng Từ khóa: Đơla hóa, Khử đơla hóa, Riel, Khmers Rouges RESEARCH GUARANTEE I hereby declare that all information in this document has been obtained and presented in accordance with academic rules and ethical conduct I also declare that this thesis has never been submitted for a master's degree at any university This thesis is the author's own research, the research results are honest, in which there are no previously published content or content by others except for fully cited citations in the thesis Ho Chi Minh City, 25 / 12 / 2020 MARY MENDA ACKNOWLEDGMENTS I owe my thesis supervisor Asso.Prof.Dr Đoàn Thanh Hà and co-supervisor Asso.Prof Ph.D Hoang Thi Thanh Hang a debt of gratitude for their close supervision and academic support throughout this study I am also grateful to the examining committee members for sharing their precious contributions and criticisms I would like to thank the State Bank of Vietnam for giving me the scholarship to study at Banking University Ho Chi Minh Also, I would like to thank my workplace, the National Bank of Cambodia for giving me a chance to study here too Last but not least, I express my deepest gratitude to my parents for teaching me everything that makes me who I am today Furthermore, I am grateful to my sister for her close support and encouragement throughout this study Ho Chi Minh City, 25 / 12 / 2020 MARY MENDA CONTENTS ABSTRACT ACKNOWLEDGMENTS TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES LIST OF ABBREVIATIONS INTRODUCTION Reason to choose a topic Research objectives 2.1 Overall objective 2.2 Specific objectives .2 Research questions Research Methodology .3 The structure of the thesis CHAPTER LITERATURE REVIEW 1.1 The concept of dollarization 1.2 Dollarization classification 1.3 The method of measuring the degree of dollarization 1.4 The causes of dollarization 11 1.5 The effects of dollarization on the economy .12 1.5.1 Positive impact 12 1.5 Negative impact 13 1.6 International Experiences 14 1.7 Summary Chapter 16 CHAPTER CURRENT SITUATION OF DOLLARIZATION OF THE ECONOMY IN CAMBODIA 2.1 Analyze the current situation of dollarization in Cambodia 2000-2019… 18 2.1.1 The situation of dollarization of the economy in Cambodia 18 2.1.2 The causes of dollarization in Cambodia 28 2.1.2.1 People's faith in the Riel 32 2.1.2.2 Measuring Dollarization in Cambodia 35 2.1.2.3.Foreign exchange control 42 2.2 The impact of dollarization on the Cambodian economy .43 2.2.1 Positive impact 44 2.2.2 Negative impact 46 2.3 Summary Chapter 48 CHAPTER SOLUTIONS TO OVERCOME THE DOLLARIZATION SITUATION IN CAMBODIA 3.1 The Cambodian government's view of dollarizing the economy 49 3.2 Solutions to overcome the dollarization of the Cambodian economy 51 3.2.1 Riel empowering 51 3.2.2 Interest rate policy 52 3.2.3 Foreign exchange management policy 52 3.3 Proposals to regulatory agencies 53 3.4 Summary Chapter .56 CONCLUSION 58 RECOMMENDATION .59 REFERENCES 60 ... ACKNOWLEDGMENTS I owe my thesis supervisor Asso.Prof.Dr Đoàn Thanh Hà and co -supervisor Asso.Prof Ph.D Hoang Thi Thanh Hang a debt of gratitude for their close supervision and academic support throughout... of Cambodia in promoting the use of the Riel in the economy and solutions to dollarization in Cambodia  CONCLUSION In sum, the dissertation concludes the study and provides important recommendations... have been developed to describe money-demand behavior in countries like Argentina (Kamin and Ericsson, 1993), Latvia (Sarajevs, 2000), or in a group of developing countries (Agénor and Khan,