Govt, Defence questioned on control over CBM

 

MP Phyo Min Thein, a member of Lower House’s committee on banks and financial development, said recently that the central bank is under control of President Office’s Minister General Hla Tun. 

"The central bank is an independent organisation and its chairman is a Union level minister. But it is still under the control of General Hla Tun from the President Office, indicating that it's still going through a transition. It should be an independent organisation according to the central bank law," said Phyo Min Thein.

Vice Governor Set Aung is yet to confirm whether the bank is controlled by the President Office.

"It's very doubtful whether it's an independent organisation," Myo Myint from the National League for Democracy recently pointed out.

In a related development, NLD’s auditor general Aung Thein on January 31 raised doubt over the central bank’s ability to control domestic banknote circulation, as the printing house is under the Defence Ministry’s control. He said that the Wazi banknote printing house remains under the ministry’s control.

“The Central Bank is meant to have overall responsibility for money circulation in the country. What can we do if the (Defence) ministry is printing banknotes without our knowledge?” asked Aung Thein.

Deputy Finance Minister Maung Maung Thein admitted that the Defence Ministry had yet to hand over the Wazi printing house to the central bank.

Besides banknotes, lottery tickets, legal documents and stamps are also printed at the facility. It is also known as the Security Printing Works Factory.

Economist Myint Thoung quashed the doubt, though. 

He said that the facility is equipped with German technology. It is highly secured and prints banknotes only at the order of the central bank. He added that it will be very unlikely that the Defence Ministry run the facility. 

Phyo Min Thein, a member of Lower House’s Banks and Financial Development Committee, echoed that the Defence Ministry only takes care of the security and management tasks for the facility, Though, the operating budget is controlled by Central Bank of Myanmar.

The country has issued Ks 6.7 trillion in banknotes in the 2011-12 fiscal year and Ks 9.04 trillion in the 2012-13 fiscal year. Banknote distribution in the 2013-14 fiscal year was a bit lower than the previous year’s amount, according to Aung Ko Ko, an economist.

The Central Bank of Myanmar Law was enacted on July 1, 2013, granting the autonomy to the central bank. Previously, it was under the Finance Ministry’s control and was in charge of printing money to finance budget deficits.

Under the law, CBM’s main objectives are to:

(a) Promote monetary stability; 

(b) Enhance financial system stability; 

(c) Develop efficient payments and settlement systems; and 

(d) Support the general economic policy of the government in a way that is conducive to sustained economic development. 

The law also stipulates that to ensure the successful achievement of the bank’s objectives, the central bank should have autonomy and may exercise all the powers conferred upon it in carrying out its functions.

The bank’s current governor is Kyaw Kyaw Maung, and there are three vice governors, including Set Aung.