Nearly seven months after Myanmar’s junta seized power in a coup d’état and amid a new outbreak of the coronavirus, the country’s banking sector is in shambles and cash is in short supply, leaving account holders fearful about the security of their savings.
Public confidence in the government and banking sector was shattered on Feb. 1, when Myanmar’s military took control of the country and began a campaign of violent repression that has led to at least 1,007 civilian deaths and 5,759 arrests.
Lines now form daily for withdrawals, which have been capped at 300,000 kyats (U.S. $180) per day from A.T.M.s and 200,000 kyats (U.S. $120) per week from savings accounts to help prevent a run on the banks.
Meanwhile, the country’s healthcare system is now at the brink of collapse due to a poorly managed response to a third wave of COVID-19 that has killed nearly 8,400 people in the past month alone.
Amid the political and health crises, the kyat is depreciating while commodity prices are rising, leaving people struggling to make ends meet. New restrictions on banking have made cash transfers even more difficult and rumors abound that the junta plans to withdraw 5,000 and 10,000 kyat (U.S. $3 and $6) currency notes from circulation and that private lenders may go belly up.
Lin Htet Aung, a resident of Myanmar’s largest city Yangon, told RFA’s Myanmar Service that he is terrified that his savings will disappear due to the instability of private banks.
“In recent months, as COVID cases have risen, people have needed cash for hospital payments and other expenses like oxygen tanks, but it’s been nearly impossible to get cash out of A.T.M.s,” he said.
“It’s infuriating. Many people are now unemployed, and they are relying on the money they have deposited in the banks. Now they are afraid of losing their savings. Everyone, including me, is worried about the situation.”
Even with caps on withdrawals, some people have been forced to wait for months to access their money.
An official at Kanbawza Bank No. 1 in the Rakhine state capital Sittwe recently told RFA on condition of anonymity that his bank only gives out cash to up to 20 people per day and said the waitlist for withdrawals is full until November.
Many people are instead turning to moneychangers, who haunt the sidewalks around banks, providing cash up front for hefty fees.
A senior official at a private bank in Yangon who declined to be named said the Central Bank’s restrictions had eroded public confidence in the banks.
“It has become very difficult to rebuild trust between the people and the banks because no one can withdraw their own money,” he said.
“The banks don’t care about customers anymore and you can no longer make withdrawals at A.T.M.s. So, people have lost a lot of confidence in the banks. They mistrust the Central Bank, which controls the private banks.”
The bank official added that although the central bank still allows mobile payments, it will be impossible to rebuild public trust for as long as cash withdrawals are hampered.
Additionally, he said, private banks have been forced to send daily reports of transactions to the Central Bank, in what is seen as a bid by the junta to block funding to entities that oppose its rule. He said the regime is more concerned with its own survival and has little interest in keeping private banks afloat or improving cash flow.
Myanmar is home to four state-owned banks, 27 private domestic banks and branch offices for 20 foreign banks.
Article 7 of the Central Bank of Myanmar Law, enacted in July 2013, allows the Central Bank to freely exercise its mandate in the performance of its responsibilities in order to achieve its main objectives and objectives.
However, observers say the junta has been politically exploiting the law since at least Feb. 4, when it directly appointed two deputy governors to the Central Bank.
Dr. Sai Kyi Zin Soe, a political and human rights researcher, said the Central Bank now appears to be following the orders of the junta without any independent decision-making procedures.
“When we were under [the prior] military rule [from 1962-2011], the monetary policy and all the related systems were controlled by the military leader,” he said. “The exchange rate had been redesigned only recently to become a truly independent central bank management system connected to the world market.”
“At the moment, I don’t think the Central Bank is allowed independent decision-making power. They must make policies based on orders from the upper echelon when it comes to making necessary decisions. It is clear that they have to get permission before they can make any decision.”
Dr Sai Kyi Zin Soe said it was clear that the central bank had begun controlling the money circulation after the military decided to restrict the flow of money to supporters of the anti-junta CDM movement as well as to the NUG and the CRPH.
Myint Zaw, a businessman based in Sittwe, said the current problems were not just about private banks, but about political exploitation of the financial sector.
“Money is the main commodity in our businesses. If this product is no longer operating effectively, then things go very badly,” he said.
“Some people have speculated that if all the deposits were to be withdrawn, the Central Bank and private banks would not be able to meet the challenge. But it is wrong to think so ... This is not a monetary [supply] issue, just a political one. The Central Bank and the financial sector are being used as hostages in a political crisis."
Myint Zaw said it is easy for banks to claim that the restrictions are imposed in accordance with Central Bank directives, but the people are being left to suffer.
According to the Central Bank, the amount of money circulating in the Myanmar’s economy—outside of the banking system—increased each year until 2019, when it reached 13 trillion kyats (U.S. $7.9 billion).
But business owners say many cash-strapped businesses have been forced to shut down amid the junta’s restrictions on money flows.
At a press conference in the capital Naypyidaw on July 12, junta spokesman Maj. Gen. Zaw Min Tun said there were “fundamental reasons” behind the banking restrictions, without providing details, adding that there were no immediate plans to lift them. He also vowed that withdrawal difficulties would be resolved by the end of the month.
However, as of late August, there has been no easing of restrictions on private banks and earlier this week, Central Bank Deputy Chairman Win Thaw announced additional controls, warning that any mobile banking accounts found to be involved in transactions with the country’s shadow National Unity Government (NUG) would face unspecified legal action.
Reported by RFA’s Myanmar Service. Translated by Khin Maung Nyane. Written in English by Joshua Lipes.
This content originally appeared on Radio Free Asia and was authored by Radio Free Asia.