Since embarking on economic and political reforms in April 2011, the Burmese government under President Thein Sein has introduced a series of policies to liberalize and modernize the economy. The government is undertaking legislative reforms for the banking and financial sectors. A modern banking and financial system is needed to support the country’s economic development. At present, the Burmese banking sector is underdeveloped, exhibiting a high degree of state-control, low levels of public trust, limited financial inclusion, strict interest rate controls, and inadequate financial infrastructure. Given significant capacity constraints and operating environment weaknesses, how long it will take Burma’s banking and financial sector to effectively evolve into a modern system remains to be seen.
This Asia Focus report provides a historical background of Burmese banking crises, analyzes recent and upcoming regulatory reforms, and evaluates hurdles to the development of a modern banking system.