ATM lines form early, often before dawn. People bring plastic chairs or stools or rugs to lie on. As the sun rises, they protect themselves with umbrellas or embrace the shade and wait.
Myanmar is in the throes of a cash shortage. Since the military toppled Aung San Suu Kyi’s government in February and tens of thousands of people quit their jobs, banks have capped withdrawals, causing crowds to gather at branches every day.
The country’s central bank is still not providing banks with enough liquidity to meet demand, according to bankers, foreign observers and businessmen. Most spoke anonymously to the Financial Times for fear of angering a regime that has arrested more than 5,400 people since the coup, according to the Association for the Assistance of Political Prisoners, a human rights group.
The cash rush is one of the clearest signs that Myanmar’s economy and banking system, while gradually returning to work after the general strike that followed the coup, remains fragile.
“We don’t trust the military junta because it doesn’t show us any trust,” said Nicky, 19, a writer and medical volunteer who lives in Yangon and asked that her full name not be mentioned. “So we have to get our money back.”
In recent days, Nicky has withdrawn money from a family account at KBZ, Myanmar’s largest bank, in installments, as the bank limits withdrawals to 200,000 Myanmar kyat ($ 120) per day.
A sign of the seriousness of the problem is the rise of a parallel cash market, in which a person signs a wire transfer or check in exchange for paper money provided by a second at a reduced amount: by example, 9,000 kyat in cash for every 10,000 kyat on deposit.
“People are realizing that even if you receive money, it is almost impossible to withdraw money,” a banker told the FT. “So the 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 people of Myanmar. Most employees are back to work to make sure people are supported in their financial needs. ”
Banks, like other private companies, choose their words carefully since the coup to avoid angering either the junta or the anti-junta camp, which organized boycotts of military or non-military controlled companies seen as towing the junta line.
A physical shortage of banknotes appears to be one of the causes of the cash shortage. Giesecke & Devrient, the German company that supplied raw materials and components to Myanmar’s public security printing plant for the production of kyat banknotes, suspended them at the end of March. The company said the shutdown was a reaction to “ongoing violent clashes between the military and the civilian population.”
Staff shortages in banks and lack of confidence in the regime’s ability to manage the economy also appear to play a role.
Labor stoppages crippled the banking sector in the weeks following the coup. Bank workers and officials, including at the Central Bank of Myanmar, went on strike, forcing many branches to close.
Since April, most banks have reopened, along with factories and other businesses. Traffic in the business capital Yangon has resumed, which some say signals a partial recovery in the economy.
However, hard cash remains tight. Banks have placed increasingly strict limits on ATM withdrawals and introduced token systems to restrict the number of customers making over-the-counter transactions.
The central bank has cash reserves, bankers and analysts say, but is not providing enough to banks to meet demand. “There is money flowing, but not a lot,” a Western diplomat said in Yangon.
Many in Myanmar have exchanged their kyats for gold or dollars, both of which have hit record prices since the coup.
While the liquidity shortage has yet to trigger a crisis, analysts said prolonged problems getting money for businesses and banks could leave small banks vulnerable, endangering a sector that has long been around for a long time. 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 Thant Myint-U, historian and author.
“Since the coup, the banking crisis has intensified due to the strikes in February and March, the hoarding of liquidity in the country, the inability or refusal of the central bank to provide the necessary liquidity and of a general collapse of confidence. ”
In remarks published in the government publication Global New Light of Myanmar, Min Aung Hlaing, the head of the junta, noted the liquidity drain. He said the regime was determined to “expose those who hold a large amount of money in their hands.”
Myanmar’s government of national unity, formed by supporters of Aung San Suu Kyi, said the junta had only itself to blame. “The people of Myanmar do not believe that the junta is competent to manage the economy of the country,” said Tin Tun Naing, finance minister of the parallel administration.
“We cannot fault them for wanting to ensure that their hard-earned savings do not disappear. ”