Concluding Chapter: Prospects for Modernizing the Foreign Exchange Market
We characterize Myanmar’s forex market as the twofold prevalence and diversity of informal currency deals. Prevalence adds to the liquidity of the unofficial market and reinforces its competitiveness. Diverse informal currency deals include those embedded in the country’s informal economic activities on which effective controls have not been implemented. Given these two features, lifting exchange restrictions would not suffice to eradicate the unofficial market. Resulting low liquidity of the official market runs counter to forex market modernization which requires a concentration of currency deals in authorized dealer banks. We present possible scenarios for raising the liquidity of the official forex market, with a focus on the roles of informal brokers and foreign bank branches.
KeywordsMarket liquidity Forex market modernization Informal broker Foreign bank Myanmar
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