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Myanmar’s Banking System on Brink of Collapse
Economic Downturn Threatens Country’s Stability
YANGON - Myanmar’s banking sector is facing an unprecedented crisis as the country grapples with a devastating economic downturn triggered by the military coup in February.
Economic Contraction and Job Losses
The World Bank has forecast a 10 percent contraction of the country’s economy this year, with an estimated 600,000 people losing their jobs since the takeover. The garment industry, a major contributor to the economy and a key source of export earnings, has been severely impacted, with several foreign brands halting orders and most operations at a standstill.
Banking Crisis Deepens
The crisis has led to widespread disruption of banking services, with long queues in front of ATM counters becoming a common sight across the country. To prevent a run on banks, the military government imposed a cap on daily ATM cash withdrawals of 500,000 kyats per customer, but many banks have been unable to meet this demand.
Efforts to Instill Confidence
The Central Bank of Myanmar has initiated measures to instill confidence in the banking system, including:
- Reiterating that there is no cause for worry
- Offering new accounts with better interest rates
However, these efforts have had little impact on the public mood, given the widespread lack of trust in the military government.
Experts Warn of Dire Consequences
Experts forecast a dire situation if the crisis continues without respite, warning that rising inflation could lead to food shortages and increased poverty. The cash shortage is causing blockages in commercial supply chains, and the supply of essential commodities could be disrupted in the near future.
Alternative Forms of Currency Emerge
As the crisis deepens, many people are turning to alternative forms of currency, such as gold or US dollars, in an attempt to protect themselves from economic instability. The surge in digital payments is also a notable trend, with many businesses and individuals using mobile wallets and other online payment systems to avoid cash transactions.
International Community Urged to Provide Support
The collapse of the banking system could have far-reaching consequences for Myanmar’s economy and democracy, making it essential for the international community to provide support to the country during this critical period. In a statement, the Central Bank of Myanmar urged citizens to maintain trust in the banking system and deposit their money into banks rather than resorting to black market transactions.
Conclusion
Myanmar’s banking sector is facing an unprecedented crisis that requires immediate attention from the government, banks, and international community. The collapse of the banking system could have far-reaching consequences for the country’s economy and democracy, making it essential to provide support to the country during this critical period.