As the globalization of the world economy progresses, dollarization, i.e., all or some functions of domestic currency being replaced by foreign currency, is indeed prevalent. This study discusses the major issues of dollarization in Cambodia, the most highly dollarized economy in Asia, where the degree of financial dollarization has reached a level of more than 95%. The dollarization of the Cambodian economy has several distinguishing characteristics: first, financial dollarization and real dollarization have developed in a mutually promoting relationship; second, network externality of currency has played a crucial role in the persistent progress of dollarization under the rapid financial development; and third, the dollarization is of a domestically driven nature in the sense that bank credits in dollars are financed by only domestic deposits in dollars. While dollarization has had several merits for developing the real and financial sector of the Cambodian economy, sustainability of the highly dollarized economy is uncertain in the future. In addition to the well known cost of dollarization, such as lack of last resort function of central banks, loss of independent monetary policies, and loss of seigniorage, there is concern that sufficient amounts of dollar funds will not be available to sustain economic growth. To avoid financial constraints on growth, expansion of the usage of the Khmer Riel as the unit of account, means of payment, and storage of value is required.

一橋大学大学院経済学研究科

2015-01-31

Japanese(jpn)

departmental bulletin paper

VoR

10.15057/27058

AA12162457

一橋経済学

8

1

1

26

08巻1号 (2015.1)

https://hdl.handle.net/10086/27058