The riel value of money : how the world's only attempt to abolish money has hindered Cambodia's economic development

Publication Date: January 2001

Publisher: East-West Center

Author(s): Sheridan T. Prasso

Research Area: Banking and finance; Economics

Type: Report

Coverage: Cambodia

Abstract:

There are significant reasons why Cambodia has failed to establish a solid and stable economy, including the fact that most of its professionals and educated elite perished in the 1975 79 period under the Khmer Rouge. But one reason that has not been fully considered is this: Cambodia is the only country in the world ever to have abolished money. Pol Pot, the leader of the Khmer Rouge, abolished money, markets, and private property, blowing up the Central Bank to underscore his point. As a result, although the reissued Cambodian riel has been in circulation for almost two decades, Cambodians remain distrustful of it and regularly convert their riel into gold, jewelry, or U.S. dollars instead. This practice perpetuates the ineffectiveness of Cambodia's financial institutions, banking systems, and regulatory agencies. Cambodia needs to adopt a strong single currency-not necessarily its own-as the prevailing means of exchange or it will remain one of the least developed, most impoverished nations in the world.