Myanmar Turns to Digital Currency Amid Economic Struggles
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A Desperate Move to Revive the Economy?
In an effort to boost its struggling economy, Myanmar’s military government is considering establishing a digital currency for domestic transactions. The move comes as the country’s economy shrank by 18% in the fiscal year ended September 2021.
The State of Myanmar’s Economy
- 18% economic shrinkage: According to estimates from the World Bank, Myanmar’s economy contracted by 18% in the fiscal year ended September 2021.
- Forecasted growth: The international lender forecasts growth of just 1% through September this year, citing the impact of the pandemic and the military coup that toppled the civilian government a year ago.
The Plan for Digital Currency
Myanmar’s military government is planning to establish a digital currency for domestic transactions. However, the proposal has been met with skepticism from some experts.
Regulatory Framework and Capacity Concerns
“We think the country is not in the best position to be able to pursue something like this,” said Kim Edwards, senior economist for Myanmar at the World Bank. “It would require a very good regulatory structure and high capacity within the administration.”
Government Response
- Joint venture or government-led: Maj Gen Zaw Min Tun, deputy information minister in the State Administration Council, said that they are undecided whether to do it as a joint venture with local companies or by the government alone.
- Cautious approach: Myanmar’s central bank is also cautious about the idea, with Director-General Win Myint saying that discussions are ongoing but no decision has been made.
Global Context
Myanmar’s plans come as central banks around the world are working on their own digital currencies. China’s digital yuan project is among the most advanced, having been developed since at least 2014.
Ousted Leader’s Response
Ousted leader Aung San Suu Kyi has recognized Tether as an “official currency” for use in a fundraising campaign aimed at toppling the regime.