On 3 October 2025, the Central Bank of Myanmar (“CBM”) announced new monetary policy measures to absorb excess liquidity in the economy driven by increased digital payments and bank deposits at the CBM.
Key points from the new monetary policy are as follows:
- Banks are required to maintain with the CBM interest-bearing average excess reserves (IOER) in Myanmar kyat for 28 days.
- The IOER interest rate is set at the one-month money market average.
Historical Overview of Interest Rate on Average Excess Reserves Regulations
CBM has periodically revised the minimum reserve requirement and related interest measures to manage liquidity, support financial stability, and control inflation. We have listed below some of the key historical developments in that regard:
- 2012–2015: The minimum reserve requirement was set at 10% of total deposits (21 May 2012) and reduced to 5% following the new Central Bank Law on 17 February 2015.
- 2020–2021: In response to the COVID-19 pandemic, the requirement was temporarily lowered from 5% to 3.5% in 2020 and further to 3% in 2021 to ease banks’ capital positions.
- 2021–2023: On 25 November 2021, the CBM introduced a revised formula including banks’ current accounts and cash in hand for calculating the minimum reserve. This formula was extended until 31 March 2023, with a 3% minimum divided into 2.5% deposits with the CBM and 0.5% in cash.
- 2024: The CBM increased the minimum reserve requirement to 3.75% effective 3 May 2024 (3% at CBM, 0.75% in cash) and raised the interest rate on average excess reserves to 3.8%. Non-compliance attracted administrative actions including restrictions on auctions, branch openings, and lending.
- 2025: To absorb excess liquidity and stabilize the kyat, the CBM announced that banks must maintain interest-bearing average excess reserves (IOER) in Myanmar kyat for 28 days, with the IOER interest rate set at the one-month money market average.
This overview highlights how the CBM has progressively adjusted reserve requirements and IOER to manage liquidity and maintain financial stability, especially during times of economic challenges.
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.
