Myanmar’s exiled government turns to digital currencies as last resort against ruling junta

Business 11 September 2022

Myanmar's National Unity Government (NUG) has sent a passionate appeal to the United States Federal Reserve to assent to their request to use frozen funds in the U.S. as reserves for a new digital currency. The NUG was overthrown in a coup back in 2021, with a large chunk of members fleeing abroad.

Tin Tun Naing, a former Minister of Planning, Finance, and Industry, spoke with Bloomberg on Tuesday, listing the demands of the NUG. Naing conceded that the request is a long shot but would be key in reinstating the government.

"We just need the U.S. blessing that allows us to use the frozen money virtually," he said. "We know perfectly well that the U.S. is not going to release it in the foreseeable future, but we are aiming at making use of these frozen assets virtually."

Naing revealed that access to the funds would be instrumental in setting up a foreign reserve for the incoming Central Bank of NUG. He added that the digital currency will help the exiled government's effort to wrestle power away from the ruling government and support the NUG's "revolutionary efforts."

Noting that a direct request of funds from the U.S. will be difficult, Naing hopes that using the funds as reserves will be the best alternative. The Federal Bank of New York froze the funds in question immediately after a section of the country's armed forces seized power.

Myanmar's funds run into several billion and are being held in Singapore, Japan, and Thailand. It remains unclear if the central banks of these countries will be willing to turn the assets over to the NUG. The International Monetary Organization and the World Bank have claimed that the exact details of Myanmar's foreign reserves are unclear at the moment.

The US may grant their wish but there is still a mountain to climb

There is a chance that the U.S. Federal Reserve may grant the application by the exiled opposition, especially with the Venezuelan precedent laid down. The U.S. government gave access to previously frozen accounts to Venezuelan opposition leader Juan Guaido over the incumbent Nicolas Maduro.

Assuming the plea to use the funds as reserves for digital currency is granted, there is still a steep climb that the NUG has to overcome. The junta that seized power shows little to no signs of handing over despite international pressure. The country's currency has tumbled by nearly 40% against the dollar since the overthrow, and multinationals like Total and Chevron have left the country after multiple decades in business.

However, the NUG has shown its ingenuity in dealing with problems in the past. In December 2021, it announced it would recognize support for Tether as a currency to support its fundraising campaign to return to power.

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