On May 28, the Central Bank of Myanmar (CBM) announced that new 10,000-kyat notes will be printed to enhance the security and quality of Myanmar’s currency. The new notes will feature a new emerald-green design and watermark, as well as a chemical on both sides to make authentication easier.
However, many speculate that the new bank notes are the Myanmar government’s answer to rising inflation. Myanmar’s inflation rate in the 2015-2016 Fiscal Year reached 8.4 per cent and is expected to reach double digits in the next fiscal year. Critics say the CBM is not doing enough to tackle the country’s inflation and lower the national debt, which had reached over US$9 billion by the beginning of this year.
“The CBM should reduce its dependence on the government and take more responsibility if there is a problem. It should be more independent in setting monetary policies for the stability of the monetary sector. There should be accountability and responsibility as well. The CBM is mainly responsible for the inflation problem and needs to publicise its methods of dealing with this problem in a transparent manner. Likewise, it needs to explain these methods to the parliament. The government didn’t inform the parliament or our committee about the banknotes. It is likely that the CBM and government have reached an agreement. But it is not good to print new banknotes at this time, as currency depreciation is low and unstable.” said MP Phyo Min Thein, a member of the Lower House Banks and Monetary Sector Development Committee.
“I don’t think the government is issuing more banknotes to balance the budget. I heard the government wants to exchange the newly printed banknotes with old banknotes to improve security. Nonetheless, they should issue new banknotes transparently. The law says the CBM must submit a report to parliament at least twice a year. The CBM is weak in informing the public, and they lack transparency,” the MP said.
International and local banking experts say Myanmar’s financial sector is weak, and personal banking in Myanmar is not popular. Only 5 per cent of transactions in Myanmar are made through banks. About 60 per cent of transactions are conducted through unregulated financial institutions, according to experts at the Asean Financial Inclusion Conference held on October 29 and 30 last year.
Economist Myint Thaung said: “It is impossible for us to compare the CBM to other international banks. The CBM is not in a position to operate in its prescribed manner, despite being an independent entity. The CBM has to deal with monetary policy, the interest rate, currency exchange rates, inflation and the sale of treasury bonds and bills. With regard to the exchange rate, the CBM should buy and sell its cash reserves. On the other hand, the CBM has to keep three-month reserves for imports. So the CBM has a great deal of work to do. It is difficult to say that to what extent they can do it and what kinds of difficulties they face.”