The desire for clean and unmarked US dollar bills in Myanmar provides some food for thought as to the function of money.
One of the more memorable oddities that once confronted the visitor to Myanmar was the strict scrutiny applied upon presentation of US dollar bills. Although the object of desire in hotels, shops, restaurants and just about everywhere else, nevertheless not all greenbacks were equally welcome. The highly sought-after bills constitute the world’s reserve currency, the unit of account for international trade and investment and the manifestation of Washington’s global money power. Yet, in Myanmar, the physical appearance of a US bill mattered. Fail the beauty test and a bill might be rejected outright, or at the very least be assigned a lower exchange rate.
Acceptable US dollar bills had to meet certain criteria: They had to be clean. No marks, no scuffing, and certainly no stamp or ink marks. They had to be crisp. Preferably unfolded, no creases, categorically no tears. The $100 Benjamin Franklins were (and still are) the most prized. Newer (and more colourful) the better.
Then there was the serial number. Some numbers auspicious, some otherwise, some seemingly indicative of criminal enterprise. For a long time bills with a serial number beginning with the letters “CB” were especially unwelcome. After all, what could CB stand for but counterfeit bill?
Making the issue all the more curious was that such attention to physical attractiveness did not pertain in the slightest to Myanmar’s own currency, the kyat. Kyat notes were accepted in any old state. Indeed, the more tattered, worn, stained and inscribed upon, the more they seemed to circulate. What was going on?
As a monetary economist and historian, I fancied the answer was simple, and consistent with traditional theories of monetary value that assigned to money three functions: a means of exchange; a store of value, and a unit of account. The first two seemed especially relevant in solving the puzzle. Simply, the kyat was not regarded as a store of value (who would save in it, given Myanmar’s long history of monetary instability and high inflation?). It was enough to conduct the ordinary business of life, but it was not an instrument to protect one’s family, nor to take a punt on the future. Accordingly, it didn’t really matter what it looked, felt or smelt like. Consistent with Gresham’s law that bad money drives out good, kyats were quickly spent back into circulation anyway.
But the US dollar? Now there was a store of value. Inviolable against the superstitious actions of Myanmar’s military leaders, the dollar was solid. A comfort now and later. A ticket to something and somewhere better. Such a talisman had to look the part. A dollar’s physicality, durability, obvious quality, was part of its strength.
Money is different now. Money today is overwhelmingly not in any tangible form. Bits and bytes in the ether, we understand that monetary value is determined simply by degrees of trust.
For a long time, this was explanation enough. More recently, however, I have had second thoughts. Money is different now. Money today is overwhelmingly not in any tangible form. Bits and bytes in the ether, we understand that monetary value is determined simply by degrees of trust. Of course, in truth it was always thus – but now we are allowed to acknowledge this reality. Money is a social construction, an economy’s “operating system”, whatever the physical form it takes.
So what does all this have to do with the desire for clean US dollar bills in Myanmar, and the historical indifference to the appearance of the kyat? Without rejecting the original thesis, I would now stress more the promise element of currencies. Good “for all debts”, the US dollar was (and is) a vehicle to get things done, and as the basis for much social organisation (almost as much outside the US as within its borders). In Myanmar, where decades of military rule instilled a system in which resources were allocated less by market relations than by arbitrary command, the kyat failed to effectively perform its full function as a currency. Soon, it came not to look like one.
In the future?
As in most countries since the Covid-19 pandemic, digital and mobile money has taken off mightily in Myanmar, and all to a good end, in the view of this author. However, in Myanmar as elsewhere, so far this digital revolution in financial services remains largely confined to the role of money as a means of exchange, rather than a store of value (let alone a unit of account – who measures the value of a car in Bitcoins?). Cryptocurrencies have made inroads, but mostly this is at the speculative fringe and their volatility and lack of widespread acceptance undermines them in doing as money does. Meanwhile, efforts to create digital sovereign currencies, including China’s recent experiments, seem more about social surveillance than anything else.
Currency as coined liberty – the demand for uncompromised, offline, representation of monetary value – is not dead yet. But keep ‘em clean, unfolded, and watch those serial numbers.
Sean Turnell was a Visiting Senior Fellow at the ISEAS - Yusof Ishak Institute.