Following reports of endemic economic and financial troubles, the military regime-controlled Central Bank of Myanmar (CBM) announced plans on Sunday to issue a “limited number” of new 20,000-kyat banknotes starting in late July.
Worth twice the highest denomination currently available—10,000 kyat (approximately US$3.50 at market rate)—the newly issued banknote will commemorate the completion of a giant Buddha statue now under construction in the regime’s administrative capital of Naypyitaw, the central bank’s announcement stated, and mark one year since the 2022 birth of a “white elephant” that the junta celebrated as a sign of its right to rule.
The CBM said the new banknotes would be made available to the public only in exchange for damaged, lower-denomination notes of equal value at CBM branches in Naypyitaw and the cities of Yangon and Mandalay. Each person making the exchange will be entitled to no more than three 20,000-kyat notes.
Illustrations in the CBM’s statement show that the new banknote will feature an image of the white elephant on the front, and a print of the two bridges between Mandalay Region and the central Myanmar city of Sagaing on the reverse side. Albino elephants are dubbed “white elephants” in Myanmar and several other Asian countries, and celebrated as signs of “prosperity and peace.”
The issuance of the new note was announced against a backdrop of gross domestic product (GDP) still straining to recover from a severe contraction after the 2021 February military coup, an inflation rate near 14 percent, and a fiscal deficit of 5.4 percent of GDP for the year ended in April 2023, according to a June report by the World Bank.
Following the CBM announcement, the value of the kyat dove to an unprecedented low on the black market, as some currency exchanges opened on Monday with a rate of nearly 3,500 kyat to the American dollar.
There has been a strong association between the issuance of higher-denomination notes and concerns about spiking inflation in the highly cash-reliant country ever since the collective national trauma that followed the late dictator General Ne Win’s sudden, arbitrary demonetisation of select banknotes, among other economic mismanagement, in the 1980s.
In response to these concerns and the volatility of the exchange rate, the CBM gave assurances that the new issuance will not affect the inflation rate, since it will only replace damaged lower-value notes with a limited quantity of new 20,000-kyat “commemorative notes” rather than adding to the total currency in circulation. The CBM added that it had no plans to demonetise existing banknotes.
“All the existing banknotes will continue to be official denominations,” said the CBM in the Sunday statement.
The CBM also said that it was focused on observing fairly strict policy constraints in order to maintain financial stability.
“The Central Bank of Myanmar has been practising relatively strict financial policies. Similarly, it has been supervising closely, keeping in check, and providing required support for banks and other financial institutions,” the statement said.
However, observers and businesspeople in the country remarked that the regime’s shifting regulations and restrictions on financial transactions, including the compulsory conversion of foreign monies to local currency, have created impediments to business activity and disrupted international trade.