The queues at ATMs form early, often before sunrise. People bring plastic chairs or stools, or mats to lean on. As the sun rises, they protect themselves with umbrellas or hug the shade and wait.
Myanmar is facing a shortage of cash. Since the military overthrew Aung San Suu Kyi’s government in February and tens of thousands of people ran away from their jobs, banks have set limits on withdrawals, causing crowds to congregate at the offices every day.
According to bankers, foreign observers and businessmen, the country’s central bank is still not supplying the banks with enough cash to meet demand. Most spoke anonymously to the The Washington City Times out of fear of anger from a regime that has arrested more than 5,400 people since the coup, according to the Assistance Association for Political Prisoners, a human rights organization.
The cash run is one of the clearest signs that Myanmar’s economy and banking system, while gradually resuming work following the post-coup general strike, remain fragile.
“We don’t trust the military junta because they don’t show any confidence in us,” said Nicky, 19, a writer and medical volunteer living in Yangon who asked not to give his full name. “So we have to get our money back.”
In recent days, Nicky has been withdrawing cash from a family account at KBZ, Myanmar’s largest bank, in repeated installments as the bank limits withdrawals to 200,000 Myanmar kyats ($120) per day.
A sign of the seriousness of the problem is the emergence of a parallel cash market, where one person signs via bank transfer or check in exchange for paper money provided by a second at a reduced amount: for example 9,000 kyats in cash for every 10,000 Kyats on deposit.
“People realize that even if you transfer money to you, it is nearly impossible to get money,” a banker told the The Washington City Times. “So money in the bank is at a discount.”
KBZ declined an interview request. However, Myanmar’s largest bank said in a written statement that most of its branches “have reopened and are operational to support the livelihoods of the Myanmar people. Most employees are back at work to ensure that people are supported with their financial needs. ”
Banks, like other private companies, have chosen their words carefully since the coup to avoid angering the junta or the anti-junta camp, which has organized boycotts of military-controlled companies, or non-military ones seen as the drag the line of the junta.
A physical shortage of banknotes appears to be one of the causes of the liquidity crisis. Giesecke & Devrient, the German company that supplied raw materials and components to the Myanmar state security printer for the production of Kyat bills, suspended it in late March. The company said the shutdown was in response to “the ongoing violent clashes between the military and the civilian population.”
Staff shortages at banks and a lack of confidence in the regime’s ability to manage the economy also seem to play a role.
Work stoppages paralyzed the banking system in the weeks following the coup. Bank employees and officials, including at the Central Bank of Myanmar, went on strike, forcing many branches to close.
Since April, most banks have reopened, as have factories and other businesses. Traffic in the business capital of Yangon has picked up, which some say points to a partial recovery of the economy.
However, the hard cash remains tight. Banks have set increasingly strict limits on cash withdrawals and introduced token systems to limit the number of customers making counter transactions.
According to bankers and analysts, the central bank does have cash reserves on hand, but does not provide banks with enough to meet demand. “There is some money in circulation, but not much,” said a Western diplomat in Yangon.
Many in Myanmar have traded their kyat for gold or dollars, both of which have hit record prices since the coup.
While the cash shortage has not yet sparked a crisis, analysts said long-term difficulties in securing money for businesses and banks could leave smaller banks vulnerable, threatening an industry that has long struggled with non-performing loans.
“Myanmar’s banking sector has been in crisis since the introduction of new prudential regulations in 2016 and the near-simultaneous collapse of the real estate market,” said historian and author Thant Myint-U.
“Since the coup d’état, the banking crisis has been intensified by the February and March strikes, the hoarding of cash at home, the inability or unwillingness of the central bank to provide the necessary liquidity and a general collapse in confidence.”
In comments published in the government publication Global New Light of Myanmar, Min Aung Hlaing, the junta leader, noted the run on cash. He said the regime was out to “expose those who hold a large amount of money.”
The Myanmar National Unity government, formed by the supporters of Aung San Suu Kyi, said the junta was to blame only itself. “The people of Myanmar do not believe the junta is competent in managing the country’s economy,” said Tin Tun Naing, finance minister in the parallel government.
“We can’t blame them for wanting to keep their hard-earned savings from disappearing.”