Central Bank of Myanmar introduces updated clearing and settlement system

Central Bank deputy governor U Soe Min said the institution has introduced a new payment and settlement system called CBM-NET 2 on November 16.

The Central Bank of Myanmar, supported by Japan and commercial banks, this week launched the Central Bank of Myanmar Financial Network System 2, an upgraded version from the old system. It was known for the abbreviation CBM-NET 2.

CBM-NET, the first version, went live in January 2016, providing the financial sector with a real- time gross settlement system (RTGS) – making the once-manual process of clearing and settling payments almost entirely electronic.

The Japan International Cooperation Agency (JICA) provided technical support for both the old and new systems.

“CBM-NET 2 was to enable other payments as well. It is mainly a settlement system for transactions. It can be used for inter-bank transactions,” U Soe Min said.

“Individuals can transact in large amounts and transactions up to the volume of the whole system can be made on it.”

The old version, CBM-NET, is an automated system but there are procedures requiring paper documents, making it necessary to speed up the settlement and reducing user.

CBM-NET 2 can work 24/7 for inter-bank transactions done in Myanmar kyats as well as to handle large payrolls and utility bills. This will help Myanmar’s transition from a cash-based society to an electronic payment system, said JICA.

In Myanmar, still largely a cash-based economy, the COVID-19 pandemic has forced individuals, employers and businesses to move online, driving the growth of epayment and e-services.

But significant risks remain. Ongoing internet restrictions in the restive states of Ra khine and Chin, affecting over a million people, as well as blocking of websites of activists and media outlets raise doubts over whether consumers in Myanmar can rely on services provided online. The censorship has also been slammed by mobile operators and commercial cham bers, who warn that the censorship hurts Myanmar’s reputation as an investment destination.

CBM-NET 2 connects all local banks, including commercial and state ones, as well as foreign banks which are licenced to do business in Myanmar, to conduct transactions.

“In the past, the banks had to transact only from head offices but not from branches. But if private banks are connected to ‘Core Banking’, the branches can transfer cash from one another,” said U Soe Min, referring to a back-end system that processes banking transactions across the various branches of a bank.

Straight-through processing (STP) between central banks and commercial banks and electronic check processing will improve the efficiency of payments from every state and region.

The new system is expected to pave the way for Myanmar banks, payments and card systems to modernise.

Source : Myanmar Times

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