Money Summary and Analysis

 

In Cambodia their form of currency is known as Riel. Each US dollar is worth 4100 Riel. The Riel has only been in circulation for 30 years so it’s relatively new ("CCH - Cambodian Money"). This is due to the fact that when the political instability occurred (Communist Khmer Rouge-with leader Pol Pot- taking power from 1975- 1979 then Vietnam taking control) , each different ruling party enforced their own currency with specific policies. Another reason for instability is the incredibly high rate of inflation. Inflation rate is 20%, which is more than five times greater than the rate of the United States ("Cambodia Money - Globe Aware"). It is a very poor medium of exchange, store of value and unit of account for these reasons. Their currency is disliked so much that many firms and businesses demand to be paid in US dollars because the inflation rate is so high, the frequency of changing prices and the fluctuating value of the riel. Currently, Cambodia is using fiat money as their currency, although before enforcing a stabilized government in 1980, the different political factions would change currency when they arose to power so this forced the citizens to use currency money ("Cambodia: Money and Banks"). Cambodia has a central bank called the National Bank of Cambodia ("Cambodia: Money and Banks"). It’s located in Phnom Penh and its duties are to manage the monetary exchange policies, regulate banks and financial institutions and also to control the national currency (National Bank of Cambodia). However, the central bank is also known for funding communist regimes with under the table funding, they have been nicknamed the “red bank” and the “Banque Rogue.”  This corrupt system of banking also has a negative effect of the stability of the monetary system and economy. To fix Cambodia’s money stability problem they must reduce their rapid rate of inflation. This can only be accomplished by forming some political stability and by having the government banish the members of the National Bank that make it corrupt. If these steps are taken the country of Cambodia will finally have a firm unit of account, store of value and medium of exchange.

 

 

 

 

 

Works Cited

 

 

 National Bank of Cambodia. Web. 01 Dec. 2009. .

"Cambodia Money - Globe Aware." Volunteer vacations, working vacations, Costa Rica, Peru, Machu Picchu, working holiday, vacation, volunteer abroad - Globe Aware. Web. 02 Dec. 2009. .

"Cambodia: Money and Banks." Cambodia travel guides: Siem Reap, Angkor, Phnom Penh, Sihanoukville - hotels, resturants, maps, airlines and more. Web. 01 Dec. 2009. .

"CCH - Cambodian Money." CCH - Cambodian Community of Hawaii - Aloha Khmer! | Honolulu. Web. 02 Dec. 2009. .

 

"Economy - Cambodia - tax, problem, average, growth, area, annual, system, infrastructure." Encyclopedia of the Nations - Information about countries of the world, United Nations, and World Leaders. Web. 02 Dec. 2009. .