Effective 23 February 1963, all 24 commercial banks in Myanmar—10 foreign and 14 indigenously owned—were nationalized and amalgamated into 4 state banks. In addition to the Central Bank of Myanmar, Union of Burma Bank, which serves as a central bank, the other state banks were the State Agricultural Bank, the State Commercial Bank, and the Industrial Bank. After subsequent reorganizations of the banking system, these became the Myanma Investment and Commercial Bank, Myanma Economic Bank, and the Myanma Foreign Trade Bank. Agricultural credit is provided by a separate Myanmar Agricultural and Rural Development Bank. Public savings increased sharply in 1977 after the banks raised interest rates. Efforts to attract the considerable liquidity in the hands of the public into the banking sector, and thence into investment, have not had much success.
By the end of 1994, licenses to open representative offices had been issued to 19 banks from overseas—six from Thailand, five from Singapore, three from Malaysia, and one each from France, Indonesia, Cambodia, Hong Kong, and Bangladesh. Eventually, 54 foreign banks had offices in Myanmar, but 2000-2002, 21 of them left the country, and nine more downgraded their operations there. As of the end of 2002, 27 foreign banks have representative offices in Burma, but none from the US. Since 1994 four private domestic banks have been permitted to conduct foreign exchange transactions for the first time. Various types of foreign exchange licenses have been issued recently to the private sector by the Central Bank. It issued seven authorized dealer licenses, three money changer licenses, 396 acceptor and holder licenses, and 66 FEC changer licenses in August 1994. Despite the liberalization of its economy, the country still lacks a capital market. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $103.9 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $170.7 billion. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 10%.