CNI News
18 July 2024
Monetary inflation is getting worse than before and although it is necessary to make politics stable and arise a stable government, it might not be easy to emerge so at present, said economic and banking experts.
Because some private banks had some problems about housing loans a few days ago, the people were so worried that they withdrew a lot of their money from the banks. However, they could not withdraw as much as they need.
The occurrence of bank problems was because of a wrong economic system and as long as the system was correct, inflation and prices would not decrease, U Htay Aung Kyi, a banking expert, told CNI News.
"It is not easy for banks to regain the public trust. Mainly because of a wrong economic system, bank problems emerged. If the banking system recovers, the public will believe in banks. If this keeps up, another bank problem can appear. There was one lakh kyats before in the system, but when prices go up, it's necessary to have three lakh kyats now. At any rate, bank notes have been printed out. It's called currency injection to the economic system. It re-invites inflation. It's a vicious circle. The main thing is that the economic system needs to recover. Economy is related to politics. If politics is not stable, economy is not stable as well. They tried to find an answer by authority, but not by knowledge." he said.
It would be anybody's guess when a stable government would emerge. The inflation would be re-controlled only when politics is stable and there are investments. Economy is directly proportional to politics, said economic and banking experts.
People waiting in line to withdraw money in front of the CB Bank during the Covid-19 pandemic (old picture)
The Central Bank of Myanmar released its ways to control the monetary inflation on 3rd May.
Although the Central Bank has increased deposits and loans of banks, the CBM has set the minimum reserve requirement ratio for banks in Myanmar Kyat from 3.5 percent to 3.75 percent in order to control the growth of the total money supply including domestic banknote circulation and to reduce inflation.
The increase in the average rate of interest paid on surplus reserve money from 3.6 percent to 3.8 percent has started since May, said the CBM.
Banks are operating only with the public deposits and if the people do not deposit their money at banks, it might be dangerous to banks, an economic analyst told CNI News.
" To tell the truth, It's dangerous. It would be convenient only if the economic system is good. Only if the economic system is good, as a result, will the import and export systems be good. Foreign direct investments will enter. As long as politics is not good, economy will be bad. The price of dollar goes up from 3,000 until 5,000 kyats. And the price of gold has got higher and higher as well. It's still not easy to better." he said.
At present, the people can easily withdraw their money from private banks.
ATM machines have been replenished with money, which private banks have announced. However, if someone wants to withdraw over 200 lakh kyats, they have to sign and withdraw after giving the reason why reportedly.
