Amid exile and economic meltdown, Myanmar’s democratic government has embraced cryptocurrency in its effort to raise $1 billion in support.
The National Unity Government (NUG) has effectively been Myanmar’s democratic government in exile since a coup d’etat following elections in February 2020. A military junta overthrew the country’s democratically elected administration, claiming that over 11 million votes had been cast fraudulently in an election that it had won by a landslide.
Circumventing Centralized Power With Digital Currencies
Having been designated a terrorist group by the junta, which also tightly controls the banking system, NUG have had to resort to alternative financial infrastructure, including cryptocurrencies. NUG plans to accept more cryptocurrencies, in further defiance of the Central Bank of Myanmar, which banned the use of all digital currencies in 2020, having already recognized the use of Tether.
“When the time is right and if it’s needed for our revolution, we will definitely expand the list of our approved cryptocurrencies,” said NUG finance minister Tin Tun Naing. “Many institutions and organizations around the world are really eager to help us in this revolution,” he added.
Leaving a Depreciating Fiat
In addition to providing an alternative to traditional financial intermediaries, stablecoins like Tether also offer potential stability. Whereas Myanmar’s kyat plunged almost 50% against the dollar directly following the coup before stabilizing – Tether theoretically maintains a one-to-one ratio. Meanwhile, a digital currency is also being considered following the return of the democratic government. “We already have infrastructure, technology, skilled personnel and institutions that will support us in place,” said Tin Tun Naing, “We have everything ready.”
However, the junta is also carefully considering the benefits of a digital currency, which could enable easier detection and monitoring of transactions perceived as a threat to the regime. “We are taking the establishment of a digital currency and improving online payment systems into consideration,” junta spokesman Zaw Min Tun said.
Ultimately, it remains to be seen whether digital currencies could gain a legitimate foothold in the South Asian nation. Internet penetration remained around 43% in January 2021, despite widespread launch of mobile services in 2014, according to Datareportal. Additionally, the World Bank’s senior economist for Myanmar Kim Edwards believes that the central bank lacks a sound enough regulatory structure and technology for digital currencies to be viable. Consequently, Myanmar “is not in the best position to pursue something like this,” he said. One such attempt to launch a Myanmar Dollar already collapsed last year.
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