Just as the loan of over twenty trillion Myanmar Kyat was finalized,
this news was imdiately relayed back to the dostic front.
Early in the morning,
Beijing.
Central Bank.
International Division.
The head, Yuan Yi, organized a seminar.
He invited the departnt’s main mbers and so experts from research institutes specializing in economy and currency.
After providing such a large loan to Myanmar,
post-loan risk control was a must.
Only now the situation was a bit complicated. Currently, Myanmar’s economic developnt had no issues, but its currency problem had suddenly beco more pronounced, giving the leaders of the Central Bank quite a headache.
One country.
The situation with two types of currency is not uncommon in Huaxia.
But like what was happening in Myanmar at the mont,
where the Asia Dollar, a minority currency, was playing an increasingly important role in the main currency circulation regions and even directly participating in economic activities—this left them sowhat bewildered.
It was as unimaginable as the Hong Kong Dollar suddenly becoming circulated and settled for value preservation within the dostic market.
This was an unprecedented situation.
There were no prior examples.
"At the end of last year, we provided a 160 billion RMB loan to Myanmar to support their economic developnt, improve people’s livelihoods, and carry out large-scale infrastructure construction. This money was gradually converted by the Myanmar Central Bank at the international exchange rate.
Due to the massive influx of Myanmar Kyat into the market, coupled with excessive issuance by the Myanmar governnt, the depreciation of the dostic currency value of the Myanmar Kyat began, which was within our expectations. The stability of the Asia Dollar’s value was also anticipated.
However, what we did not expect was that the Asia Dollar, during the process of depreciation of the Myanmar Kyat, beca a capital risk hedge pool for the people of Myanmar. Since they could not lay hands on Myanmar’s US dollar reserves, they discovered that the Asia Dollar could be freely exchanged and started treating it as a value-preserving currency similar to the US dollar, resulting in a massive exchange of it, which led to the Myanmar Kyat participating extensively in Myanmar’s dostic economic and savings activities.
That is not the main issue. Generally, comrcial bank loans require a deposit reserve ratio, a portion of which must be handed over to the Central Bank to secure the public’s deposits and withdrawals, as well as to ensure the safety of the residents and companies’ deposits, controlling the total volu of dostic currency circulation.
But Myanmar Bank does not have this restriction; all Myanmar Kyat proceeds can be loaned out completely, which has resulted in the market circulation volu of the Myanmar Kyat completely exceeding initial expectations, and the depreciation forecast for the Myanmar Kyat will beco longer and more severe.
This is not just a dostic affair for Myanmar; it has even begun to affect our trade imports and exports with Myanmar, causing many of our dostic enterprises to join in this behavior to ensure the safety of their funds.
The purpose of this eting is to garner collective wisdom, to explore the potential impact this will have on trade between our country and Myanmar, and even on the future economic developnt within Myanmar. The higher-ups place great importance on this matter."
Yuan Yi started the eting by explaining the current situation in detail.
The experts seated all looked through the docunts in their hands, feeling more and more alard the more they read.
It was as if Myanmar had gone mad.
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How could such a situation be allowed to occur.
"Weren’t there restrictions on the exchange between the Myanmar Kyat and the Asia Dollar before? When were these lifted?" one expert, who had been involved in the loan to Myanmar, flipped through the docunts at hand, unable to find the answer to this question.
"We still cannot determine the exact ti. The Myanmar Central Bank has not released any related information, and we do not have the Myanmar governnt’s work report. We only know there was a limit before, but when it was reached, it was as if the limit no longer existed.
We estimate that the major interest groups in Myanmar exerted their influence and collectively lifted this restriction to facilitate their asset preservation. You must understand, the amount of Myanmar Kyat they held collectively was enormous, and keeping it in Myanmar banks would have resulted in severe losses.
The justification is also easy to find: on one hand, Myanmar Bank holds half of the disbursent rights for the RMB, and on the other, the economic activities in the Myanmar Economic Zone and other areas of Myanmar are increasing daily, so the possibilities are nurous."
Yuan Yi responded,
which was as good as saying nothing.
Experts looked at him speechlessly.
Yuan Yi continued to sip his tea calmly, rolling his eyes as if to say, "Why are you asking about sothing I don’t know?"
The expert thought for a mont then asked, "So the current problem is, without the constraint of reserve requirents, there’s ardent demand for value preservation from all sectors of Myanmar society, leading to Myanmar Bank holding a vast amount of Myanmar Kyat. Since Myanmar Bank is unwilling to suffer a loss from devaluation and is aggressively investing, has Myanmar Kyat’s dostic liquidity completely spiraled out of control?"
"Yes," Yuan Yi nodded.
"At this rate, Myanmar’s inflation rate will beco frighteningly high. Lang Cai can’t be unaware of this," the expert expressed doubtfully.
Yuan Yi replied, "Of course he’s aware, but we now believe that Lang Cai has a grander sche. They’ve also tasted the benefits of economic stimulus. The money we’ve provided is finite; once it’s used up, it’s gone.
Lang Cai probably wants to make a strong effort once again, using external forces to build Myanmar in one fell swoop. However, this is all speculation for now. We can’t know the specifics yet, but a clue can be seen from the fact that the budget was exceeded this ti."
Another expert interjected, "It might not be Lang Cai’s intention; it could be the result of the combined efforts of major interest groups in Myanmar. Lang Cai might have had to compromise and agree to the over-budget plan."
"I agree with this view as well. It’s likely that Lang Cai didn’t want to print money but compromised in the end, fearing that he couldn’t stem the tide, especially considering the imnse power of the interest groups," another person added.
"I disagree; how influential Lang Cai is in Myanmar needs no further discussion. Even if he compromised, he wouldn’t do so completely unconditionally, adding fuel to the fire," Liu Jin, who had been silent until now, spoke.
Everyone listened and agreed.
Compromise was possible.
But Lang Cai’s authority had not reached the point where he had to totally and unconditionally compromise and exacerbate the situation.
If it’s not compromise.
Then, if not the proactive approach ntioned before, there must be another objective.
"Academician Liu, what do you think?" Yuan Yi asked. Liu Jin was that Academician Liu.
After considering, Liu Jin spoke, "I also disagree with the assertion that Lang Cai wants to complete construction in one go. Lang Cai is not that kind of person; it’s determined by his personality. I believe he has a different motive."
"What motive?" Yuan Yi asked with interest.
"The abolition of Asia Dollar," Liu Jin stated placidly.
Upon hearing this, the room fell silent. Abolishing the Asia Dollar... Logically, it seed to make sense.
Liu Jin continued to explain, "It is virtually impossible for Lang Cai to abolish the Asia Dollar through administrative order right now. Ling won’t agree, the Myanmar Economic Zone won’t agree, and they hold important strategic positions and are not weak. Lang Cai cannot solve the Asia Dollar issue militarily.
So he only has economic and currency asures left. Economically, the Myanmar Economic Zone has already achieved preliminary industrialization, shares borders with three countries, and has unimpeded roads, making it economically independent from Lang Cai’s control.
So, it all cos down to currency.
The disappearance of exchange restrictions, the current loans, and the potential for more loans in the future are all parts of a trap set by Lang Cai. He not only resolves the funding for developnt but also eliminates a rival
The outco is self-evident; Lang Cai, holding the initiative and all the advantageous conditions and being the legitimate ruler of Myanmar, will surely be the final winner, of course, if nothing unexpected happens."
"What kind of unexpected?" Yuan Yi pressed.
"Many things can occur. There are still two years left in Lang Cai’s term as President. Two years from now, the new President’s stance on the Asia Dollar may change, and the longer the ti, the larger the variables. However, it’s certain that the Asia Dollar will be incorporated into the Myanmar Kyat system," Liu Jin shook his head.
As Liu Jin spoke, a flicker of doubt passed through his eyes since the Asia Dollar didn’t seem like a passive entity, nor did Ling, but he couldn’t see how the Asia Dollar had any hope of winning.
Yuan Yi listened and fell silent.
Muttering sothing unproductive.
The discussion then continued with other topics of the day.
"We can now be certain that Myanmar’s construction developnt will continue for a considerable period. Our Huaxia companies are securing more and more projects. Besides the RMB-funded projects, other additional projects are being exchanged for Asia Dollars at the first opportunity.
Due to Myanmar Central Bank’s restrictions, these funds cannot be massively converted into US dollars and converting them into RMB would an our exchange rate losses would be considerable. Thus, these funds have not been transferred back to our country and are still with Myanmar Bank.
Since Myanmar Bank is not the Myanmar Central Bank, they hold many US dollars and other foreign currencies but are under no obligation to exchange foreign currency for our enterprises. Therefore, last week Myanmar Bank proposed to our bank a large-scale opening of free exchange between Asia Dollar and RMB.
This aims to address the issue of our companies’ earnings being stuck and unable to return to the country. Consequently, this would an we officially treat the Asia Dollar as one type of foreign exchange reserve. Regarding this issue, what opinions and suggestions do you have?"
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