Money Matters in Myanmar

Banks and non-bank financial institutions, such as insurance companies, are a common feature of developed economies. A well-functioning financial sector is seen as key to the growth and well-being of a nation. It facilitates commerce by enabling payment services, mobilising savings, allocating capital to firms and entrepreneurs, and enabling firms and households to better manage risk. Well-functioning financial markets help to direct monies to exciting and innovative enterprises and to impose discipline on firms, boosting performance. All this expands and develops a country’s potential and capacity. In short, financial systems play an important role in a country’s economic development.

In Myanmar, the financial sector has traditionally been dominated by an unsophisticated and volatile banking sector. The past few decades have witnessed all kinds of mayhem ranging from bank nationalisations to episodes of demonetisation to a full blown financial crisis that saw the collapse of several of the nation’s largest banks. All these happenings have not only destroyed the foundations of the finance sector but also severely impacted the people’s trust and confidence in the banking and finance sector.

This is especially problematic, for at the core of all finance is trust. Financial institutions of any kind – whether a bank, insurance company, or other – depend upon trust. Without this trust, depositors would never part with their savings, nor would insurance premiums ever be paid. As Myanmar embarks on its banking and finance renaissance, a core component of its reform agenda is ensuring that this trust and confidence, now lost, is somehow regained. Government laws and policies will be instrumental in creating a new environment of dependable and accountable banking and finance institutions.

It is an exciting time for Myanmar, a time of mammoth transition, when old and new dance side by side. New private banks have been set up, “licensed” foreign exchange booths are now on every street corner, and shiny Western Union logos are as prevalent as sidewalk teashops. The institutions that make up the current banking environment deserve to be tourist attractions in their own right, for they so aptly capture the story of modern Myanmar: the past weaved with the future in a tapestry that is simultaneously uncomfortable, perplexing, and splendid. From the decrepit, though stately and majestic, colonial buildings housing state banks such as the Myanmar Economic Bank and the Myanmar Agricultural Development Bank in Yangon, to the glossy new state-of-the-art, air-conditioned branches of the new private banks in far-flung cities throughout Myanmar, the promise of new international banking practices in previously remote regions of the country is the promise of a very different Myanmar from that of years gone by.

Yet, while the new banks and financial service providers are quickly positioning themselves throughout the country, they are still being used by a very small number of people. How will the older state banks interact with the new technologically-savvy private banks and foreign banks? Will the citizens in far-flung places who have never experienced 24-hour electricity or clean running water suddenly start depositing excess funds in a bank account? We are in the process of finding out, as old entrenched practices hold on and at times yield to newer ideas.

For more on Myanmar’s fascinating banking and finance system, read my new book. Available at:



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