Myanmar’s junta-controlled central bank announces introduction of digital currency

The junta-controlled Central Bank of Myanmar (CBM) has announced plans to create digital money to reduce the use of banknotes, according to the CBM and its officials. The CBM said in a public statement issued on June 24 that it had formed a new, junta-approved committee of 13 members, including a deputy governor of the bank, to design and plan for the issuance of the new Central Bank Digital Currency (CBDC). According to its directive from the junta, the committee is tasked with studying and analysing the best methods, technologies, and regulatory frameworks to use in ensuring the successful introduction of the CBDC into the economy, as well as assess its potential impacts on payments systems and monetary policy. The committee will also be responsible for overseeing and maintaining the infrastructural foundations, funding, and regulation of the digital currency after it is introduced. Dr. Zaw Oo, a member of the CBM’s board of directors, told Myanmar Now that relying too much on cash for the purpose of currency circulation creates weaknesses for a country’s economy, including the costs and difficulties in printing and storing the banknotes and the vulnerability to counterfeiters. “With digital methods, nowadays KPay and other methods have become easy and convenient—that’s the same concept,” he said, referring to a digital payment service commonly used for everyday point-of-sale purchases in Myanmar. “We have to store banknotes in banks. Then we have to print banknotes. Then we have to deposit them, count them. When all these things are done online, it becomes easier for us to exchange and use money with each other,” he added. “Everything becomes more economical, that’s why this issue is being pursued so urgently in developing countries. So we also have to work to make this happen in Myanmar.” An advisor to the junta as well as a fellow at the Myanmar Narrative Think Tank (MNTT), Dr. Zaw Oo was appointed to the CBM’s board of directors in May, according to the regime-run Myanmar Gazette. The MNTT is a public-private research group operating within the junta’s ministry of information. An unnamed economic analyst said that usually, CBDC digital currency in the world has three types: electronic money (E-Money), digital money accounts like bank accounts where payment transfers can be made, and cryptocurrency. Digital currencies issued by central banks around the world can take the form of electronic money, digital accounts that allow for transfers, or cryptocurrency, according to another economic analyst, who asked not to be named. Neither the CBM nor the military council has specified what kind of digital currency they plan to issue. The economic analyst emphasised the potential challenges in introducing the new form of currency in Myanmar. Trust in the country’s banking system is fragile, he said, and any proposed system would require the laborious development and preparation of new technology, infrastructure, and human resources. “When he sees something somewhere and mentions it, they usually say yes sir, we'll do it, and form committees,” the analyst said, referring to junta chief Sen-Gen Min Aung Hlaing and his subordinates. “I think it’s like that. The manpower to do these things—well, in the digital sphere, we’ll need a lot of tech people.” Additional challenges may arise from the unreliability of the supply of electricity and internet connectivity, which has grown worse under the military regime, according to economic experts. Myanmar’s economic stagnation under the junta, aggravated by international sanctions, has been accompanied by high inflation, which stood near 34 percent as of April of this year, according to the World Bank. The regime’s defence spending has also reached record highs during the ongoing, multifront civil war in Myanmar. Unable to obtain international loans and aid to meet urgent budgetary needs, the junta has been funding these expenditures by selling treasury bonds and bills as well as printing banknotes and issuing new denominations. The publicly mandated National Unity Government (NUG) estimated that between the February 2021 coup and May of last year, the junta-controlled central bank printed nearly 30 trillion kyat (US $6.8 billion) in new banknotes, an average of 9.2 trillion (US $2.1 billion) kyat per year. By comparison, under the civilian-led administration of the National League for Democracy, which was ousted by the military, the bank printed 3.6 trillion kyat (818 million) in its last two years, totalling one-fifth the amount per year issued by the CBM under the junta. The NUG operates its own digital payment systems, including those used through the app “NUGPay” and the Spring Development Bank (SDB). The NUG established the SDB in July 2023 to facilitate funding for the anti-junta resistance movement in Myanmar, commonly called the “Spring Revolution” by its participants.

Myanmar’s junta-controlled central bank announces introduction of digital currency

Bank officials said they were creating a new way to conduct transactions digitally to remedy problems inherent in printing banknotes, such as widespread counterfeiting as well as the costs and logistical difficulties of printing and storing cash

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