Cambodia to replace U.S. currency with blockchain platform
Cambodia is one of the most dollar-reliant economies in the world, and its imminent introduction of a blockchain payment platform has created a small panic. Blockchain is a digital system enabling immediate payments for transactions of any size, and with it, the National Bank of Cambodia states that it intends to phase out the use of the U.S. $1, $2, and $5 Federal Reserve notes by Aug. 31.
This confused the local community and triggered reports that the three bills would then be banned. The controversy commenced when Chea Serey, director of the National Bank of Cambodia, said in a statement on May 28 that the blockchain would make the local economy less reliant on the U.S. dollar.
In days, Prime Minister Hun Sen interpreted to the paper that the U.S. currency was not forbidden and still widely used, adding a hint, “In the event of a halt to the circulation of the said U.S. bills, an official announcement from the National Bank of Cambodia will be released to the public.”
He added, “All Citizens, please continue spending the said banknotes freely in the Kingdom without any loss in exchange rates or additional charges.” The statements did not prevent the panic. It was observed that merchants in Phnom Penh’s Kandal Market did not want to accept $1 bills lest they are “rendered useless in the coming months.” One said in a statement; he would not take them for worry of being stuck with them in the future. Some gas stations and tuktuk drivers were also ignoring them.
The ambition to phase out the low-value U.S. currency is acceptable. Even though they are officially identified as tender, they are complex and expensive to manage and transport. The Cambodian bank is establishing three months from June 1 to Aug. 31 for banks and microfinance institutions to accumulate $1, $2 and $5 bills so it can transfer them to a foreign country.
There will be no service charge through this period. After Aug. 31, the price of exporting the notes will be for the institutions. There will be no charge for accepting $10 notes, and the bank will negotiate with banks and microfinance institutions the exact date to stop taking the small U.S. banknotes.
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