Just in : The long awaited new law on the Central Bank of Myanmar
Sonny
Just a quick note to let you know that the National Assembly has passed the long awaited new law on the Central Bank of Myanmar (the Law). The “Central Bank of Myanmar Law”, Law No. 16 dated 11 July 2013 was released last Friday. The Law sets out the organization and responsibilities of the Central Bank of Myanmar (CBM).
The Law establishes the CBM as a legal entity having perpetual succession, with standing in a court of law. The Law approaches the CBM organization much like that of any commercial company. For example, the Law states that the State is the sole shareholder of the CBM with an authorized capital of three hundred thousand million kyats, of which one hundred thousand million kyats shall be fully paid up by the State. The Law provides, by the way, that the authorized and paid-up capital of the Central Bank may be increased with the approval of the Union Government, but not reduced. The Central Bank is also to establish a General Reserve. At the end of each year, an amount equal to forty percent of the net profits shall be allocated in multiples of million to the General Reserve until it amounts to one hundred percent of the paid-up capital of the Central Bank.
The Head Office of the CBM is in Naypyitaw but the CBM may open branches and representatives inside or outside the State with the approval of Board of Directors. The Law prescribes, among other things, the formation of the Board of Directors. It is provided that the Board of Directors consists of nine members; one chairman, three vice-chairmen and five subject matter specialists from outside chosen by the government board. The term of the chairman is five year and the term of the rest of the board of directors is four years and all the members shall not serve more than two consecutive terms. The normal meeting of Board of Directors is at least once per month with a quorum of more half of the board members.
The CBM shall report at least two times a year with regard to monetary policy and purpose and policy implementation on monetary system stabilization to the Union Assembly and the Ministry of Finance. Information related to monetary policy and improvement of monetary system stabilization is announced to public on a quarterly basis with the approval of Board of Directors.
The main aim of the CBM is to stabilize inflation, but the Law contains rules with respect to a wide range of CBM responsibilities, including:
- Currency stabilization
- Foreign exchange and International Reserves Management
- Issuance of local currency
- Stabilizing the monetary system
- Management of financial markets and the foreign exchange market
- Management of currency payment and settlement of accounts
- Performing as a last resort short-term lender of banks
The Law does not address the foreign ownership of banks in Myanmar, or the regulation of joint ventures. We expect that these matters are the subject of forthcoming regulations.
With best regards,
Edwin Vanderbruggen I Partner
T: +95 94 2031 8709 M: +95 9421156077 W: www.vdb-loi.com
Level 8, Centrepoint Towers, 65 Sule Pagoda Rd & Merchant St, Yangon
