Following the military coup on February 1, thousands of protestors erupted across Myanmar (Burma). Protestors were violently confronted by security forces bringing the economy to a standstill. Hundreds have been killed and thousands detained. Four months later, the country is facing a severe cash crisis triggered by several factors.
According to bankers and analysts, the central bank, now run by a junta appointee, has not returned some of the reserves it holds for private banks without giving any reason, leaving the banks short of cash.
A physical shortage of banknotes components also explain the issue. The Financial Times has reported that Giesecke & Devrient, the company that supplied raw materials and components to Myanmar’s state-owned A banknote (or ‘bill’ as it is often referred to in the US) is a type of negotiable promissory note, issued by a bank or other licensed authority, payable to the bearer on demand. More security printer, suspended them in late March. The company said the halt was in reaction to “the ongoing violent clashes between the military and the civilian population.”
Staff shortages and the closing of bank branches are the third issue. Many bank staff and civil servants, including central bank employees, have gone on strike to protest against the coup, leaving many banks closed or open only intermittently.
As a result of the shortage, queues are forming in Facade, face. See Obverse. More of ATMs and bank branches. The Bangkok Post reports that queues start forming outside banks at 4 am, where the first 15 or 30 customers are given a plastic token that will allow them to enter the bank when it opens at 9:30 and withdraw cash. Banks have also imposed limits on ATM and over-the-counter withdrawals.
Black-market traders will take online transfers in The Eurosystem comprises the European Central Bank and the national central banks of those countries that have adopted the euro. More for physical notes in various currencies but add a hefty commission of up to 10%.
Meanwhile, internet outages make online transactions difficult, and international transfers have largely stopped working.
The UN Development Programme warned that under the combined effects of the pandemic and the coup, Myanmar faces economic collapse, which in its worst-case analysis could push nearly half the country’s 54 million people into poverty, compared to about a quarter in 2017.
“If the situation on the ground persists, the poverty rate could double by the beginning of 2022,” said UNDP in its report. “By then, the shock from the crisis will have resulted in significant losses of wages and income, particularly from small businesses, and a drop in access to food, basic services and social protection.”