A military government is proposing creating its own digital currency a year after overthrowing the democratically elected leader.
What could go wrong?
Major General Zaw Min Tun, deputy information minister for Myanmar, said the military leadership wants to create its own digital currency to “improve financial activities” in the country, according to a report from Bloomberg. He indicated that the government might create the currency on its own or work alongside local firms.
The country’s central bank, meanwhile, has already banned Bitcoin and other cryptocurrencies; it says it’s still just in the research phase of central bank digital currencies (CBDCs), electronic versions of national currencies. It’s nowhere as far along as China, for example, which is piloting a digital yuan, or the Bahamas, which has been using “Sand Dollars” for more than a year.
So, why is the junta suddenly so gung ho about a digital currency?
It may have gotten the idea from supporters of ousted head of state Aung San Suu Kyi, who was deposed in a February 2021 coup. The National Unity Government consists of exiled government officials from Suu Kyi’s National League for Democracy, as well as other parties and interest groups. Its goal is to take down the junta. In December, it recognized USDT, a issued by Hong Kong-based company Tether, as its official currency. The stablecoin tracks 1:1 with the U.S. dollar and can be used just about anywhere with an internet connection, which is better than cash for a government in exile.
But the junta also needs to get the economy going. Its GDP per capita is the lowest in Southeast Asia. That’s likely bound to get worse in the near future. The U.S. has sanctioned 65 people for their involvement in the coup, as well as 26 organizations with ties to the junta, limiting their ability to do business. That includes the government-owned gem mining company, a major source of income for the generals.
Other sanction-hit countries have turned to crypto to get around U.S. sanctions and boost sagging economies, with mixed results. In February 2018, Venezuela began issuing the Petro (not a digital version of the bolivar), which is ostensibly backed by its oil reserves. Though the government has mandated its use for a variety of services, it’s failed to spur growth. Venezuela’s GDP ranks near Myanmar’s and its annual inflation sits above 680%.
Iran, meanwhile, saw Bitcoin mining as a potential source of profitability, at one point mandating that regulated miners sell any mined BTC back to the central bank to replenish its dwindling foreign reserves. But that’s been dampened by strains to the country’s electrical grid, resulting in several temporary moratoriums on mining.
China, meanwhile, has cut off access to global cryptocurrencies while promoting its CBDC, which regime critics contend will have the effect of increasing financial surveillance and making citizens and companies fearful of crossing the state—lest their bank accounts be frozen.