Cash shortage threatens Myanmar’s banking crisis

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The ATM queue is very early, usually before dawn. People bring plastic chairs or stools, or cushions to recline. When the sun rises higher, they use parasols to protect themselves or embrace the shade and wait.

Myanmar is facing a shortage of cash.Since the army overthrow The government of Aung San Suu Kyi and tens of thousands of people were unemployed in February, and the bank set a limit on withdrawals, resulting in crowds gathering at branches every day.

According to bankers, foreign observers and businessmen, the country’s central bank has still not provided banks with enough cash to meet demand. According to the Political Prisoners Aid Association, a human rights organization, most people were interviewed by the Financial Times anonymously because they were afraid of angering a regime that has arrested more than 5,400 people since the coup.

The cash run is one of the most obvious signs that Myanmar’s economy and banking system are still fragile despite the gradual return to work after the general strike after the coup.

“We don’t trust the military government because they don’t have any trust in us,” said 19-year-old Nicky, a writer and medical volunteer living in Yangon, who asked not to mention his full name. “So we have to get our money back.”

In recent days, Nicky has been withdrawing money in installments from the family account of KBZ, the largest bank in Myanmar, because the bank limits daily withdrawals to 200,000 Myanmar Kyats (US$120).

One sign of the severity of the problem is the rise of parallel cash markets, in which a person signs a bank transfer or check in exchange for banknotes offered at discounted amounts: for example, a deposit of 9,000 kyats per 10,000 dollars in cash.

A banker told the Financial Times: “People realize that even if your money is transferred to you, it is almost impossible to withdraw cash.” “So the money in the bank is discounted.”

KBZ declined the interview request. However, Myanmar’s largest bank stated in a written statement that most of its branches “have reopened and started operations to support the livelihoods of the people of Myanmar. Most employees return to work to ensure that people’s financial needs are met. stand by.”

Like other private companies, since the coup, banks are choosing their wording carefully to avoid angering the military government or the anti-junta camp, which has organized resist Military-controlled enterprises may be regarded as non-military enterprises dragging the route of the military government.

Myanmar banks strictly restrict ATM withdrawals © Sai Aung/AFP via Getty Images

The actual shortage of paper money seems to be one of the reasons for the cash crunch. Giesecke & Devrient, a German company that provides raw materials and components to Myanmar’s state-owned security printers to produce kyat banknotes, suspended their production in late March. The company stated that the suspension was a response to “continuing violent conflicts between the military and civilians.”

The shortage of bank staff and the lack of confidence in the economic capacity of the regime also seem to be at work.

strike Banking business is paralyzed In the weeks following the coup. Bank employees and civil servants, including the Central Bank of Myanmar, went on strike, forcing many branches to close.

Since April, most banks as well as factories and other enterprises have reopened. Traffic in Yangon, the commercial capital, has picked up, and some people believe that this marks a partial recovery in the economy.

However, cash is still tight. Banks have imposed stricter and stricter restrictions on ATM withdrawals and introduced a token system to limit the number of customers who conduct over-the-counter transactions.

According to bankers and analysts, the central bank has cash reserves on hand, but has not provided the banks with enough cash to meet demand. “There is some money in circulation, but not a lot,” said a Western diplomat in Yangon.

Many people in Myanmar have been trading kyats for gold or US dollars, and both prices have hit record highs since the coup.

Although the cash shortage has not yet triggered a crisis, analysts say that the long-term problem of obtaining capital for companies and the banking industry may make small banks vulnerable and endanger industries that have long been plagued by non-performing loans.

“Since the introduction of new prudential regulations in 2016 and the almost simultaneous collapse of the real estate market, Myanmar’s banking industry has been in crisis,” said historian and author Thant Myint-U.

“Since the coup, the banking crisis has intensified due to strikes in February and March, domestic cash hoarding, the central bank’s inability or unwillingness to provide the required liquidity, and the general collapse of confidence.”

In a statement published in the government publication “The Global New Light of Myanmar”, the military leader Min Aung Lai pointed out the loss of cash. He said that the regime is determined to “expose those who hold large amounts of money.”

The Myanmar National Unity Government, composed of supporters of Aung San Suu Kyi, stated that the military government can only blame itself. “The Burmese people do not believe that the military government has the ability to manage the national economy,” Ding DunnaiThe Minister of Finance of the Parallel Government said.

“We cannot blame them for wanting to ensure that their hard-earned savings will not disappear.”

Twitter: @JohnReedwrites



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