August 20, 2016

Is it foolish to keep your money in a bank?

It may sound strange to say that someone who deposits money at a bank is naive. Yet in Myanmar, it’s not as odd as it sounds. Those who do deposit their money with Myanmar banks get an interest rate of around 8.25 percent. Generally speaking, this is much higher than rates in most other countries – including the United States. Does this mean that those who use banking services in Myanmar are able to save more than their US counterparts? Not exactly, because when we factor in 8 percent inflation, there’s little surplus left. That’s one reason why so few people avail themselves of banking services. And when inflation jumps to 13 percent at the end of this year as predicted by IMF, depositors could actually lose money!
A further reason why most of the country is unbanked is that there are more lucrative markets for investment. For example, the US dollar has greatly strengthened against the kyat – since last year it’s risen from around 900 kyat to the dollar to K1,300. Those who invested in US dollars made a 50 percent profit in a short space of time. So it’s really no surprise that some people think those who keep their money in banks are naive.


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