Early efforts by Myanmar’s opposition National Unity Government (NUG) to issue a U.S. dollar-backed cryptocurrency have failed. They should try again, and harder: economic independence would further speed the momentum of resistance forces’ recent victories and free the Myanmar people from the military junta’s authoritarian grip.
As things stand, the Central Bank of Myanmar (CBM) is using its monetary policy to fund the junta’s human rights abuses. Administrative controls requiring the expedient exchange of all foreign currencies to Myanmar’s kyat at an overvalued “official” exchange rate solely benefit and unjustly enrich the regime and its cronies.
For example, a trader may sell her wares abroad for dollars, which are then forcibly exchanged at an official rate of, say, 2,000 kyat to the U.S. dollar. The junta-related entities receiving these dollars then use them at the open market rate of roughly 3,000 kyat, perhaps even selling them back to the trader later in the season when she needs to import materials (i.e., “I’ll buy from you now at 2,000, and sell it back to you later at 3,000. You have no choice.”). Some of the proceeds from this scheming are then used to purchase weapons systems from neighboring countries – the same weapons used earlier this year in Sagaing Region, where several children were left dismembered and burned beyond recognition by junta airstrikes.
Without a viable kyat alternative, the international community must, perforce, nurture political friendships with the junta. Cross-border trade, for instance, depends upon banks under the CBM’s purview. Even clandestine cash transactions can be reined in with interest rate hikes – one of several policy tools that have been readily weaponized to drill financial leaks in adversarial ships.
In actuality, oppressive monetary policies sink everyone except those connected to the banking system. This is the junta’s exact strategy: their appointment of a military official as CBM governor effectively militarized the monetary system, reshaping pro-democracy kyat users into unwitting authoritarian stooges. Every kyat that is spent or saved now sustains the regime (through taxes, for instance), while dragging the country into an economic abyss.
Despite a mixed public attitude, cryptocurrencies have emerged as an effective response to oppressive monetary regimes. When Venezuela outlawed the use of foreign currencies, its citizens purchased crypto to shelter themselves from both crushing inflation and the reach of the government. A similar outside-political-reach motif emerged in Ukraine, after martial law constrained cross-border banking services, as well as in Lebanon, Zimbabwe, and Argentina. Currently, some Myanmar traders evade CBM controls through informal hundi money transfer channels, signaling a demand for kyat alternatives. Even the NUG has gone along with this, going so far as to approve the dollar-pegged Tether cryptocurrency as legal tender. These data tea leaves seem to say we are headed towards some kind of broad, Myanmar-specific cryptocurrency use, official or not.
As a tool for monetary independence, the advantage is clear: blockchains eliminate the need to design, print, and transport counterfeit-resistant banknotes. And blockchain-based monetary systems are undeniably farsighted: roughly 90 percent of the world’s central banks are considering blockchain-interactive Central Bank Digital Currencies. Moreover, the technical sophistication needed to implement a cryptocurrency is so modest that some, like Dogecoin and CumRocket, are issued as jokes.
Recent scandals, however, stress the need for cryptocurrencies to be anchored to stable value. For emerging currencies, a fixed exchange rate represents the path of least resistance: just peg it to the dollar and be done with it. Correspondingly, the NUG, earlier this year, tried issuing a dollar-backed cryptocurrency, appealing to the U.S. Federal Reserve to release $1 billion of frozen Myanmar funds to support it. The Fed declined.
Now, months later, the NUG has decided to bet on an online crypto bank, expected to trade in digital dollars, euros, and kyat. The Myanmar people should be livid, however. This is not because the Fed chooses to be overly cautious, and not because the Myanmar underground is experimenting at fintech’s frontier. It is because sovereign currencies reflect the faith, credit, and national pride of the people that back them, and the NUG’s willingness to do everything but issue a new currency betrays the spirit of the Myanmar people.
When the junta first turned their guns on protestors, the people responded by shielding their heads with heavy kitchen pans and lobbing pebbles with slingshots, underscoring both their peaceful nature (a nation that previously saw no need for casual gun ownership) and their willingness to do something – anything – in response. Even today, as world leaders rally support for Ukrainian and Middle Eastern struggles against tyranny, while Myanmar’s continuing pleas for help are largely ignored, the Myanmar people refuse to do nothing; instead, they’ve poured themselves into developing an underground weapons industry, fashioning handmade guns and aerial bombs from scrap metal and pipes. And, over the last year, these home-baked munitions have turned the tide against the junta’s war machine – tanks, missiles, warplanes, and all. The Myanmar people have proven their ability to get it done, regardless of circumstance.
Issuing a new, independent currency would free the Myanmar people from relying on the junta’s money for survival. Furthermore, stable underlying value need not solely consist of dollar reserves. Myanmar overflows with value; it is abundant in gold, jade, rubies, and oil. Even the country’s dirt is valuable: Myanmar’s land blocks all of western China from access to the ocean. A national currency could be backed by any or all of these resources. The question to ask, then, is “why can’t the NUG outdo CumRocket?”
The junta’s brutal tactics have revealed the steadfast faithfulness of the Myanmar people, who will stop at nothing to be free. Nearly three years of terror and torture have only bolstered their resolve, quickening their pursuit of justice and democracy. In turn, the NUG, purported representatives of the Myanmar people, should be no less committed. To the NUG, our message is clear: it’s time to give the people a genuinely independent and representative monetary system: a new currency, for a self-standing people, backed by real value.
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