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Myanmar’s Banking Sector Rocked by Fraud Scandal
In a shocking revelation, Myanmar’s banking sector has been plagued by a massive fraud scandal, with the Central Bank of Myanmar (CBM) urging for stricter regulation and supervision to curb the menace. The International Monetary Fund’s (IMF) Monetary and Capital Markets Department visited Yangon in 2018 and early 2019 to assess the country’s banking system, identifying several key risks that need to be addressed.
Key Risks in Myanmar’s Banking Sector
- Legal, regulatory, and reputational risk
- Strategic risk
- Group and related parties’ risk
- Credit risk
- Market risk
- Operational risk
- Liquidity risk
The CBM has launched a series of initiatives to address these risks, including the development of a more Risk-Based Supervision approach.
Implementing Risk-Based Supervision
The Guide to Risk-Based Supervision sets out approaches to risk assessment and risk mitigation based on international best practices. The CBM is implementing this new approach over the next year, with officials undertaking risk assessments using a new risk matrix tool as examinations come due.
Challenges Ahead
Industry experts warn that perfecting a complete risk-based approach will take years, but the CBM remains committed to implementation. The country’s banking sector has been plagued by numerous cases of fraud and corruption in recent years, leading to concerns over the stability of the financial system.
Addressing Underlying Issues
The scandal has also raised questions about the adequacy of labor laws and revenue administration practices, which are seen as contributing factors to the problem. As Myanmar’s economy continues to grow, experts say that addressing these risks is crucial to maintaining financial stability and promoting economic development.