The queues at ATMs form early, often before dawn. People bring plastic chairs or stools, or mats to recline on. As the sun rises higher, they shield themselves with umbrellas or hug the shade and wait.
Myanmar is in the grip of a cash shortage. Since the military overthrew Aung San Suu Kyi’s government in February and tens of thousands of people walked off their jobs, banks have placed caps on withdrawals, causing crowds to gather at branches every day.
The country’s central bank is still not providing banks with enough cash to meet demand, according to bankers, foreign observers and businesspeople. Most spoke to the Financial Times anonymously for fear of angering a regime that has arrested more than 5,400 people since the coup, according to the Assistance Association for Political Prisoners, a human rights group.
The run on cash is one of the clearest signs that Myanmar’s economy and banking system, while gradually resuming work after the general strike that followed the coup, remain fragile.
“We don’t trust the military junta because they don’t show us any trust,” said Nicky, 19, a writer and medical volunteer who lives in Yangon and who asked that his full name not be mentioned. “So we have to take our money back.”
In recent days, Nicky has been taking cash from a family account at KBZ, Myanmar’s largest bank, in repeat instalments as the bank limits withdrawals to 200,000 Myanmar kyats ($120) per day.
One sign of the problem’s severity is the rise of a parallel market for cash, in which one person signs over a bank transfer or cheque in exchange for paper money provided by a second at a discounted amount: for example, 9,000 kyats cash for every 10,000 kyats on deposit.
“People realise that even if you get money transferred to you, it’s almost impossible to get cash out,” one banker told the FT. “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 of the staff are back at work to ensure the people are supported with their financial needs.”
Banks, like other private businesses, are choosing their words carefully since the coup to avoid angering either the junta or the anti-junta camp, which has organised boycotts of military-controlled businesses, or non-military ones seen as towing the junta’s line.
A physical shortage of banknotes appears to be one cause of the cash crunch. Giesecke & Devrient, the German company that supplied raw materials and components to Myanmar’s state-owned security printer for the production of kyat bills, suspended them in late March. The company said the halt was in reaction to “the ongoing violent clashes between the military and the civilian population”.
Staff shortages at banks and a lack of faith in the regime’s ability to manage the economy appear to be playing a role, too.
Work walkouts paralysed banking in the weeks after the coup. Bank employees and civil servants, 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 picked up, in what some there believe signals a partial revival of the economy.
However, hard cash remains tight. Banks have put increasingly strict limits on ATM withdrawals and introduced token systems to restrict the number of customers making counter transactions.
The central bank does have cash reserves on hand, according to bankers and analysts, but is not providing banks enough of it to meet demand. “There is some money circulating, but not a lot,” a western diplomat in Yangon said.
Many in Myanmar have been trading their kyat for gold or dollars, both of which have hit record prices since the coup.
While the cash shortage has not yet caused a crisis, analysts said that protracted problems securing money for business and banking could make smaller banks vulnerable, endangering a sector that has long struggled with non-performing loans.
“Myanmar’s banking sector has been in crisis ever since the introduction of new prudential regulations in 2016 and the near simultaneous collapse of the real estate market,” said Thant Myint-U, a historian and author.
“Since the coup, the banking crisis has intensified because of the strikes over February and March, the hoarding of cash at home, the inability or unwillingness of the central bank to provide needed liquidity and a general collapse in confidence.”
In remarks 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 bent on “exposing those who keep a large amount of money in hand”.
Myanmar’s National Unity Government, formed by Aung San Suu Kyi’s supporters, said the junta had only itself to blame. “The people of Myanmar do not believe that the junta is competent in managing the country’s economy,” Tin Tun Naing, minister of finance in the parallel administration, said.
“We cannot blame them for wanting to ensure that their hard-earned savings do not disappear.”