Myanmar's Demand For Pristine Dollar Notes, Following A History Of Monetary Instability, Borders On The Absurd

on July 03 2013 10:44 AM
US Dollars And Myanmar Kyats
A man counts U.S. dollars and Myanmar kyats at a money changer in Yangon. Reuters/Soe Zeya Tun

After decades of military ruling accompanied by frequent currency upheaval, the people of Myanmar have learned to value dollars, but they have taken it to an absurd level – any U.S. dollar bills not in pristine condition are likely to be rejected by local vendors in Myanmar.

In addition to the slightest tear, stain, corner crease or any imperfections, a dollar bill is also scrutinized for its mintage year and sometimes even the serial number to ensure that both are acceptable, the Asia Times reports. Bills that do not meet the strict, at times baffling, requirements would be refused.

"The serial number of the bill was CB, and the belief was -- even though this sounds so absurd -- that CB stood for counterfeit bill," Sean Turnell, an economics professor at Macquarie University in Sidney and an expert on the Myanmar economy, said. Turnell encountered the situation on a recent trip to the country. "I explained to the young girl behind the counter in one of the top hotels, and I said well if it were a counterfeit bill it wouldn't have CB on it. She completely agreed and at one point said, 'We really have to get over this.'"  

A number of countries, such as Panama, Ecuador and El Salvador, have adopted the U.S. dollar along with their local currencies, usually countries with histories of economic instability. Citizens of these countries seek out alternative means to store their wealth, buying gold and other more stable foreign currencies.

Recent studies by University of Wisconsin-Madison economics professor Edgar Feige estimated that as much as a third of all U.S. currency is held abroad.

Myanmar fits the bill. Many abrupt demonetizations of the local kyat have happened in the past. In 1985, the government introduced a 78-kyat note, coinciding with the year of the 75th birthday of General Ne Win, Myanmar’s then military ruler who believed in numerology.

Just two years later, the government abolished the 25, 35 and 75 kyat notes and replaced them with 45 and 90 kyat denominations. Both new bills were allegedly chosen as they are divisible by nine, and Win’s personal astrologer had informed him that the number nine was auspicious.

The move was not auspicious for the country’s citizens, who saw their savings wiped out. The economic instability that resulted from the move led to nationwide protests, culminating in a coup d’etat, the Asia Times reports.

A history of monetary upheaval explains why the people seek dollars as an alternative store of wealth but not their absurd demand for perfection. The reason for that, according to Turnell, who has advised the U.S. Congress on economic sanctions against the Myanmar junta and is currently advising opposition leader Aung San Suu Kyi on economyc affairs, is rooted in the very meaning of what is money.

"People are valuing foreign currency because they're viewing it in the same way they view gold and precious metals and precious stones and that there's some intrinsic value to it," Turnell said. "If you're valuing something because you think it's intrinsically valuable, rather than being a currency decided by local tender and by the law, then the actual physical appearance of the note matters."

In a broader economic sense, this quirky if frustrating practice has only a small impact, especially for Myanmar, a country that is already confronting a host of other economic and development challenges.

"In the case of Myanmar, for example, if the scale of the impact of this practice is considered to be one, the scale of the impact of the lack of trust in the Myanmar kyat and the Myanmar banking system is 50 or more," Lex Rieffel, a nonresident Senior Fellow at the Brookings Institution’s Global Economy and Development Program in Washington, D.C., said.

However small the economic implications, the practice can be a unique source of anxiety for travelers. Only in the past year has Myanmar’s tourism economy matured beyond anything other than cash. Prior to that, with no access to overseas banks, a traveler who accidentally sat on his or her wallet and creased all the bills within had little recourse.

Robert Ongcoy, who works as an English teacher in Vietnam, experienced the frustration firsthand when he traveled to Myanmar for Lunar New Year this year. Before leaveng, Ongcoy got a fresh batch of U.S. dollars from the local bank, then picked out only the best bunch for use in Myanmar. But when he arrived in Mandalay, more than a third of his best notes were rejected.

While the locals were guileless and sincere, according to Ongcoy, their demand for pristine notes was determined and at time produced some tension.

"It was like the bait-and-switch thing. It was constant," he said. "I basically stayed down there for 30 to 35 minutes watching the guy try to manipulate the bills that he was going to give back to me like an expert card magician."

Ongcoy said that, in addition to using a money pouch, he stored his bills in a Ziploc bag to protect them from the humidity or any stray beads of sweat. Other travelers have been seen toting around wooden money boxes or nestling bills safely in the pages of a hardcover book.

Fortunately, Myanmar’s financial infrastructure is developing and now includes a limited number of money transfer and credit card options. The clean-bill demand may soon end with the maturation of financial institutions and the influx of foreign capital.

"I would say that within five years it will be all over," Turnell said. "That's going to knock a hole in all this, because the hotels and everyone will start to accept payments. It will last a bit the further away you get from the big hotels in [Yangon], etcetera, but I think it will go."

Until then, travelers to Myanmar would be best prepared with a good hardcover book and a healthy supply of Ziploc bags, the Asia Times reports.

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