It used to be that Cambodian commercial banks governmental requirements were quite good, could someone confirm today's situation ?
I agree on the risk associated to the riel if a sudden political decision was taken to unpegged it from the $ but I don't believe the time is here yet.
Apart from that no much other risks. You can even buy at this time of the year, and sell before Kh new year for extra profit (1 to 2%) on top of the yield

As for changing in the MFI it will cost you more than going to some major money changer that can order you the largest denomination if you check with them before hand. Changing up to 6 figures is a breeze.

eriksank wrote:

Gaudente wrote:Do you think the institution would be able to change 80,000,000 riel back to 20,000 USD when the deposit expires ? would a regular bank do it ?

They most likely would.

However, the Cambodian banking system mostly operates in US dollars, without lender of last resort, who would be capable of printing US dollars to keep the system afloat, when and if needed. In other words, they are simply running on a variation of the Argentina scenario. They ignore this and are all happily engaged in fractional reserve banking. If one single major bank ever gets into trouble, all the banks will go bust one by one. It is an accident waiting to happen. At that point, the exchange rate for the riel will sink to almost zero. Therefore, there is a real risk associated to holding large amounts of riel, because the Cambodian banking system is systemically unsound.

If the exchange rate for the Riel sunk to nearly zero... those holding Riel would be multi-millionaires in USD over night. It is in fact the other scenario where the exchange rate soars to trillions of Riel to the dollar which is a nightmare for the Riel account holder.

The Riel is a proper currency but is non-convertible. Thus, it's worthless everywhere in the world except Cambodia. There is no danger of it being decoupled from the dollar.

The threats facing Cambodia's banks are mainly due to the incompetent bank management teams here in Cambodia and not the governance of the country.

TheGrinchSR wrote:The threats facing Cambodia's banks are mainly due to the incompetent bank management teams here in Cambodia and not the governance of the country.

Imagine Cambodia's and Thailand bank management teams were equally competent or incompetent. Even then, Cambodia faces a higher risk, because unlike Thailand, they are not conducting business in their own currency. If they suddenly needed billions of US dollars to stay afloat, there is simply nobody who will supply them the dollars.

The money-changers often have varying rates.

I suppose you could make a small amount going back and forth..until they realised what you were doing.

eriksank wrote:

TheGrinchSR wrote:The threats facing Cambodia's banks are mainly due to the incompetent bank management teams here in Cambodia and not the governance of the country.

Imagine Cambodia's and Thailand bank management teams were equally competent or incompetent. Even then, Cambodia faces a higher risk, because unlike Thailand, they are not conducting business in their own currency. If they suddenly needed billions of US dollars to stay afloat, there is simply nobody who will supply them the dollars.

You appear to have completely misunderstood banking risk. If Cambodia was in a USD version of the Euro... then it would indeed be a risk to hold accounts in dollars; as the Greeks are discovering at the moment. But they're not, the USD is completely independent of Cambodia in terms of its value and transferability. Banks in Cambodia tend to have high levels of capital reserve (thanks to their risk adverse positioning in lending - which is improving but is still not great). If the banks were to go under here... a bailout could be simply carried out by issuing lots of worthless Riel notes - once they ran out of dollars. A run on Cambodian banks remains incredibly unlikely. Though some of the small banks are going to end up gone - it's going to be mainly done via M&A work. Same as any other immature banking market; only the strong survive.

TheGrinchSR wrote:If the banks were to go under here... a bailout could be simply carried out by issuing lots of worthless Riel notes - once they ran out of dollars. A run on Cambodian banks remains incredibly unlikely.

There is a contradiction in what you say. If people expect a bailout to be carried out with worthless Riel, any serious trouble at a Cambodian bank would lead to a run.

TheGrinchSR wrote:Though some of the small banks are going to end up gone - it's going to be mainly done via M&A work. Same as any other immature banking market; only the strong survive.

"Small" does not mean "weak", and "big" does not mean "strong" in terms of finance. If only the large banks tend to survive, is is because governments may prefer the banking industry to be a cartel or even a monopoly. But then again, there are also limits to how far governments can push their desire of turning the entire economy into cartels or monopolies. Satoshi Nakamoto gave the first shot, The bitcoin paper in what will become a long battle in which both the banking cartel and the governments will eventually find themselves expelled out of banking and even issuing currencies. So, yes, politics always defeats the market, but at the same time technology always defeats politics.

No apparent issue with the Indonesian rupiah, which is also tied to the greenback and has a lot of zeroes. What would be the major differences with the riel?

eriksank wrote:

TheGrinchSR wrote: Even then, Cambodia faces a higher risk, because unlike Thailand, they are not conducting business in their own currency. If they suddenly needed billions of US dollars to stay afloat, there is simply nobody who will supply them the dollars.

yes, there is.

Other countries have a stake in Cambo's friendship:
China for economic and foreign policy reasons.
USA for foreign policy reasons, although it will probably lose out to China.
Korea for economic reasons.
The Asian Development Bank will not want to see Cambo go under.

I would bet on China which has always been a friend, and China has huge reserves in dollars.

TheGrinchSR wrote:
The threats facing Cambodia's banks are mainly due to the incompetent bank management teams here in Cambodia and not the governance of the country.

banking incompetence is a political governance issue. if the banks are incompetent it would be because a lot of that incompetence is going into government pockets.

Western banks are also guilty of incompetence.