Deposit Dollarization in Myanmar

Discussion Papers


by KUBO Koji

August 2014


Myanmar has peculiar conditions of deposit dollarization that were shaped by administrative controls. On the one hand, restrictive controls encouraged the accumulation of foreign currency deposits (FCD). On the other hand, foreign currency loans (FCL) were not practiced officially; therefore, FCD was not utilized for credit. Given the adverse effects and persistence of dollarization in other dollarized economies and the recent recovery of local currency deposits in Myanmar, this paper opts for the prohibition of FCL and offers policy measures for de-dollarization.

Keywords: dollarization, foreign currency deposits, foreign currency loans, Myanmar
JEL classification: F31, E41, O53

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