Myanmar

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Government of the Union of Myanmar Ministry of Finance and Revenue Central Bank of Myanmar

The Central Bank of Myanmar Law (1990) empowers the Central Bank of Myanmar (CBM) to act as the sole issuer of domestic currency, to act as a banker to the Government, to act as an adviser to the Government in respect of economic matters, to inspect and supervise the financial institutions, to manage the international reserves of the State, to perform the transactions resulting from the participation of the State in intergovernmental organizations and to undertake all the responsibilities in the name of the Government in dealing with the aforesaid organizations on behalf of the Government.

In particular, the Central Bank of Myanmar is also empowered to set reserve requirements, maximum discount rate, maximum and minimum interest rates on loans and deposits, asset and liability ratios and minimum cash margins. Thus, the Law enables the Central Bank of Myanmar to less rely on quantitative credit control and more on indirect instruments of monetary control including the use of reserve requirement ratio and interest rate policy.

Accordingly, the Central Bank of Myanmar has currently used such monetary policy instruments as reserve requirements, interest rate policy and limited open market operations in order to maintain adequate level of money supply for ensuring balance between economic expansion and general price level.

Statutory Reserve Requirement

In exercising monetary policy instruments and prudential measures, the Central Bank of Myanmar sets statutory reserve requirement ratio to be maintained by the commercial banks at 10 percent of total deposits as well as capital adequacy ratio at 10 percent and liquidity ratio at 20 percent.

Increase of the Interest Rates

The Central Bank of Myanmar increased its central bank rate from 10 percent to 12 percent effective from April 1, 2006 in order to prevent a sharp increase in money supply and to contain inflationary pressure which may arise from the increase of Government Employees' salaries effective on the same date. Accordingly, maximum interest rates on deposit and lending were raised to 12 percent and 17 percent respectively.

Issuance of Government Treasury Bonds

To provide more investment opportunities to the public and for the emergence of a capital market in Myanmar as well as to introduce an indirect instrument of monetary policy, the Central Bank of Myanmar, on behalf of the government, has issued 3 year and 5 year government treasury bonds since 1993. Effective from 1st April 2006, 3 years and 5 year government treasury bonds bear interest rates of 10.5 and 11.0 percent respectively. The treasury bonds deposited by the financial institutions in the Central Bank of Myanmar are treated as cash balance in calculating the reserve requirement.

Acting as Agent of the Government

In accordance with the Central Bank of Myanmar Law, the Central Bank maintains the Government Account and makes payments and accepts deposit of 62 State Economic Enterprises and 167 Ministries and Departments on behalf of the government.

Relationship with International and Regional Organizations

In the area of international monetary cooperation, the Central Bank of Myanmar, on behalf of the government, maintains a close working relation with international financial institutions such as the International Monetary Fund (IMF), the World Bank and the Asian Development Bank (ADB) and cooperate with the IMF through periodical consultations.

 In the area of regional banking and financial cooperation, the Central Bank of Myanmar participates in regional central banking organizations, e.g. the SEACEN (South East Asian Central Banks) in which views and experiences on central banking issues are exchanged and regional problems on monetary and banking are also discussed in order to promote better understanding of regional financial issues and the ACU (Asian Clearing Union) which aims primarily at promoting regional trade and monetary cooperation.

Since Myanmar became a member of the ASEAN in 1997, the Central Bank of Myanmar has been closely working with other ASEAN member countries in the ASEAN and ASEAN+3 Finance Processes. In this regard, Myanmar had successfully performed its chairmanship of the ASEAN Finance Ministers process in 2002. In this capacity, the 6th ASEAN Finance Ministers' Meeting and related finance meetings were held in Yangon, Myanmar in April 2002.

Supervision on Domestic Private Banks

With an aim to closely supervise the domestic private banks, the Banking Supervisory Committee has been formed under the guidance of the Ministry of Finance and Revenue. The Banking Supervisory Committee has been closely reviewing the progress of banking operations and giving necessary guidance and support. Moreover, 10 banking scrutinizing teams have also been formed and assigned so as to scrutinize the operations and statistics of the private banks.

Currently, 15 private banks are providing domestic banking services across the country through their network of over 180 branches. At the end of March 2007, the total amount of paid up capital, deposits and loans of the 15 domestic private banks are kyat 52,946.33 million, kyat 552,540.89 million, and kyat 373,372.97 million respectively.

Representative Offices of Foreign Banks

As of end-March 2007, 13 foreign banks have opened their representative offices in Myanmar and a new licence was issued to the following foreign bank's representative office in connection with changing the name of its parent bank.

Exchange Arrangement

In accordance with the Foreign Exchange Regulation Act of 1947 and the Exchange Control Manual of 1957, exchange control is administered by the Central Bank of Myanmar (CBM) in accordance with instructions from the Ministry of Finance and Revenue (MFR). The CBM limits foreign currency operation to three state owned banks, namely, the Myanma Foreign Trade Bank (MFTB), the Myanma Investment and Commercial Bank (MICB) and the Myanma Economic Bank (MEB)

The Currency of Myanmar is the Myanmar Kyat which is officially pegged to the SDR at Ks. (8.50847) per SDR 1. Myanmar applies margins of 2 % to spot exchange transactions, based on the fixed Kyat-SDR rate. The exchange rates of the Kyats for the Euro, Singapore Dollar, Pound Sterling, Japanese Yen, United States Dollar, Indian Rupee, Pakistan Rupee, Sri Lanka Rupee and Swiss Franc are determined by daily calculations on the basis of the value of these currencies against the SDR issued by the IMF. For the other currencies are determined on the basis of the daily foreign exchange rates of Singapore Market.

Foreign exchange certificates (FECs) are issued since 1993 by the Central Bank of Myanmar (CBM) in denominations of 1, 5, 10, and 20 units and are exchangeable with hard currencies or with acceptable traveler’s cheques. FEC 1 unit is equivalent to 1 US dollar. FECs are widely used and served the needs of visitors and investors in Myanmar. FECs are available for Kyats at the exchange centers operating in Yangon and in other major cities. Holders of FECs may deposit them into their foreign exchange accounts.

As Myanmar is a member of the ACU, settlements with member countries of the ACU are made in ACU dollars through the ACU mechanism. Bilateral trade arrangements with neighboring countries also exist.

An import program for the public sector is prepared annually as part of the foreign exchange budget drawn up jointly by the Ministry of National Planning and Economic Development and the Ministry of Finance and Revenue. Imports are permitted commensurate to the level of export earnings or service earnings. Proceeds from exports must be fully repatriated.

All payments for invisibles outside the public sector are subject to approval which is granted on a case-by-case basis. Prior approval from the Controller of Foreign Exchange (CFE) is required for all outward remittances.

Contact Details

Contact with the Central Bank of Myanmar can be made as follow:

	Central Bank Of Myanmar(Yangon)
	Address	:	No.26(A), Settmu Road, Yankin Township, Yangon
	E-mail	:	mofr_it_center@mptmail.net.mm
	Phone	:	95-1-543751
	Fax	:	95-1-543743