Historical Sketch

The first Khmer state emerged in the late 8th century and reached its largest extent in the 12th century, after which it gradually declined and finally got absorbed by its neighbors in the 15th century. In 1863, the Khmer ruler sought French protection to free the country from Siamese domination. The Cambodia protectorate existed until the French defeat in the Indochina war in 1954, after 1887 it had been integrated into French Indochina, but the Cambodian monarchy nominally remained in place. During the Second World War, Cambodia was occupied by Japan. French rule was restored after the Japanese defeat. End 1954, Cambodia (intermittently also spelled "Kampuchea") attained independence. The monarchy was ousted in 1970, and the country was renamed the Khmer Republic. In the late 1960s, Cambodia had been dragged into the Vietnam war, which set off a long-lasting civil war that ended in April 1975 when the communist Khmer Rouge took over. During their 4 years' terror regime millions of Cambodians died, and state and society structures were largely destroyed. In early 1979, neighboring Vietnam invaded Cambodia, expelled the Khmer Rouge, and installed a puppet government which did not gain international recognition. Ten years later, Vietnam finally withdrew, and Cambodian independence was restored, initially under a UN protectorate. The monarchy was reinstated in 1993.

Monetary History Overview

Traditionally, the Khmer economy has been based on silver. In transactions bullion and coins in Thai style were used. Since the mid-19th century, the Spanish Dollar entered circulation through foreign trade, as it did everywhere in South East Asia.

In 1863, France established a protectorate over Cambodia. The French colonial administration had already declared the Mexican silver Peso legal tender in neighbouring Cochin China the year before, this was now tacitly adopted for Cambodia as well. Around 1875, an attempt was made to introduce French accounting. A set of silver and bronze coins denominated in "Cambodian Franc" were produced in Belgium. They were not generally issued in Cambodia, where the population would not have accepted them, but were used in the surroundings of the royal court. For the same purpose, more pieces were minted locally around 1899 using the original but corroded dies, and additional tokens of similar style were produced in Europe in the following decade. In 1885, Cambodia formally adopted the Indochinese Piastre instead of a distinct currency.

In 1954, Cambodia regained independence. The 1st Cambodian Riel replaced the Indochinese Piastre at par beginning of the following year. The Riel repegged to the US Dollar in 1960, after the French currency reform. In August 1969, at the day of the French devaluation, Cambodia also devalued its currency by 37%, more than three times the Franc devaluation. In 1970, the Cambodian monarchy was overthrown, and the country got renamed into Khmer Republic. The exchange of banknotes to promote the "Khmer Riel" could never be carried out systematically in the growing chaos. As the country got more and more dragged into the Vietnam War, its economy and currency began declining. In October 1971 began a series of devaluations at ever increasing rates until 95% of the value had been destroyed in mid-1974. The Vietnam War had also triggered a civil war in Cambodia, in which the Khmer Rouge defeated their opponents and took power in April 1975. They immediately implemented radical reforms in society and economy, depopulating the cities and driving people to the rural areas. Money and banking were abolished such that Kampuchea (as it was officially called now) did not have any currency for the next four years.

In early 1979, neighbouring Vietnam invaded Cambodia and ended the Khmer Rouge terror regime. Economy had to be reconstructed, and in March 1980, the 2nd Cambodian Riel was created as national currency. The restoration of monetary economy progressed slowly throughout the 1980s, transactions were predominantly conducted in gold or in kind. Banking began again during the transitional UN protectorate, the National Bank of Cambodia restarted operations in February 1992. The Riel was not convertible during the 1980s, a first exchange rate against the US Dollar was set in 1986, and two years later it was set to float. A first stabilization occurred in 1992 at about 15% of the initial quotation. Until the early 2000s, the Cambodian currency depreciated by another 50%, since then the exchange rate could be kept more or less stable.

Cambodia joined the International Monetary Fund (IMF) on 31.12.1969.

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