Oct 10, 2013

Myanmar Central Bank to control banking financial institutions only

The newly reformed Myanmar Central Bank will not control financial institutions other than banks, according to a bank official.

“The Central Bank will not control non-banking financial institutions. Those institutions will be controlled by the Ministry of Finance,” said Khin Saw Oo, the bank’s vice governor.

The independent Central Bank will administer 22 state-owned and private banks in Myanmar to maintain the country’s financial stability, but micro-finance institutions will be kept under the control of the Ministry of Finance.

Myanmar took a long time to draw up the new Central Bank Law, as the government and parliament had to negotiate on more than 200 points regarding it. The Myanmar Central Bank, which is facing challenges integrating regional and international practices, continues to reform the country’s fiscal policies.

Since the opening up of Myanmar in 2011, the Central Bank has aimed at achieving a single rate for currency exchange.

However, discrepancies still occur between the Central Bank’s index rate, the Theinbyu Exchange Counter’s rate, banks’ exchange rates and outside market rates.

The bank has two main objectives: to promote efficient payment mechanisms, ensuring liquidity, solvency, and proper functioning of the financial system, and to foster monetary, credit and financial conditions conducive to sustainable economic development.

Economists have called for an official system to monitor changes in international financial markets, as well as to evaluate the investment flows, in order to develop sound fiscal policies for economic and financial stability.

Khin Saw Oo also said that the Central Bank is redrawing the Financial Institution Law (16/1990) with the World Bank’s help. The bill will be publicized in third week of this month so that stakeholders such as government departments, bankers, and parliamentary committees can provide suggestions.

Once it is released, the new financial institution law will cover different aspects of the financial sector, including those of the capital market that will emerge in Myanmar in 2015, she added.

Source: Eleven Weekly Media