Myanmar intends to launch its own digital currency this year in order to boost the economy.

According to a top State Administration Council spokesman, Myanmar’s military government plans to establish a digital currency to support domestic payments and boost the economy within the year and is assessing how to proceed.

“We are undecided whether we should do it as a joint venture with local companies or as a government-only venture,” said Major General Zaw Min Tun, deputy information minister in the junta that deposed the civilian government a year ago. “A digital currency will aid in the improvement of financial activities in Myanmar.”

According to the World Bank, Myanmar’s economy shrank 18% in the fiscal year ending September 2021, and growth of only 1% is forecast through September this year. According to a report released last week by the International Monetary Fund, Myanmar’s economy could have grown by 30% if not for the pandemic and coup.

Myanmar’s generals face a deteriorating economy and the threat of new sanctions.

The proposal by the State Administration Council comes just two months after a group led by supporters of ousted leader Aung San Suu Kyi recognised Tether as a “official currency” for use in a fund-raising campaign to destabilise the military regime. Suu Kyi is currently incarcerated on a variety of charges.

For years, central banks around the world have been working to develop digital currencies, with some intending to use them for retail transactions and others intending to use them only for interbank transactions. China, which has one of the most advanced digital yuan projects, has been working on it since at least 2014.

“We believe the country is not in the best position to pursue something like this,” Kim Edwards, the World Bank’s senior economist for Myanmar, said last week at a press conference. To make it happen, he said, a very good regulatory structure and high capacity within the administration would be required.

“At this point, we are still learning about digital currencies and having discussions,” said Win Myint, director-general of the Central Bank of Myanmar’s currency-management department. We must weigh the benefits and drawbacks.”

Myanmar isn’t the only ailing economy considering cryptocurrency projects. The Venezuelan National Assembly approved a bill last month to establish provisions for digital-currency transactions. According to a Bloomberg index, inflation in bolivars, the local currency, has slowed to an annual rate of 53 percent in the last three months, down from well north of 1,000 percent in recent years.

 

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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