Myanmar Spring Chronicle – June 23 Scenes
MoeMaKa, June 24, 2023
Pressure on Myanmar’s bank and currency systems, and the option for Myanmar people
The U.S. government has officially announced that the sanctions against the terrorist group’s affiliates, the Myanma Foreign Trade Bank (MFTB) and the Myanma Investment and Commercial Bank (MICB), will take effect on June 20.
“The US government has imposed sanctions on 2 banks that are under the control of the terrorist military junta and that encourage terrorism,” said Union Minister U Htin Lin Aung, who is in the United States.
The statement issued by the US government means that, under US law, all transactions of the two banks related to the US economy have been blocked as a result of the sanctions.
Before June 20, there were reports that 2 foreign-currency exchange banks operated by the military council would be blocked. Since the news broke, the value of the dollar has risen and the value of the Myanmar kyat has fallen. On June 23, the NUG government’s NUG Pay price in dollars and kyat was adjusted from 2,940 to 3,330 as the local dollar purchase price became more than 3,000. The military council said that they would handle the flow of foreign currency directly from their central bank.
On June 23, the military council seems to have taken countermeasures regarding border trade. The Tachileik news agency has written as follows.
“Today, on June 23, 2023, the Military Council issued a statement saying that import businesses in Myanmar-China border trade must use Chinese Yuan and pay through the banking system.” It was also reported that traders were watching because the exchange rate between baht and kyat at the Thai border was also unstable.
In Myanmar, commodity prices tend to rise at the same time that the Myanmar kyat and dollar exchange rate are unstable. As for ordinary manual workers, there is no choice, so some have the opinion that they have to face it as it is. Those who have saved some money and are running their businesses are buying gold instead of Myanmar kyat and storing it as usual. The military council is said to have set their dollar price at 2,900 kyats. The news also reported that all local dollar trading has almost stopped.
On June 1, the NUG announced the establishment of an interim central bank. In an interview with Radio NUG in early June, NUG Union Minister U Tin Tun Naing said, “We must stop the military council from using funds from the central bank and local banks under their control, for the procurement of weapons for their terrorist activities. We will have to step up the restrictions on the flow of money to the military council. The next step is to establish the central bank and then, the Spring Development Bank, to guarantee the choice of the banking system for the people. Currently, transfers through NUG Pay by people for their daily lives, have increased.”
More than a week later, on June 13, Sean Turnell, an Australian citizen who was released in November 2022 after being imprisoned by the military council for serving as an economic advisor to Daw Aung San Suu Kyi, was appointed as a Special Advisor to the Interim Central Bank, by the Minister of Planning, Finance and Investment of the National Unity Government.
In the past few days, we have heard from the EOD agents and NUG Pay Agents under the NUG Ministry of Planning, Finance and Investment that preparations are being made virtually online for the Spring Development Bank. On June 20, it was reported that the US government had blocked 2 banks under the military council that handled foreign currency. No one can conclude whether this incident was a coincidence or intentional as the news broke while NUG representatives were still discussing the establishment of an interim banking system.
NUG Planning and Finance Minister U Tin Tun Naing told Radio NUG, “Myanmar people save money in local banks because they earn interest. The military council controls that money. The military council itself is circulating and using the money by selling Treasury bonds and loan contracts.” It is said that 20 trillion in cash was withdrawn after the coup. It seems that NUG has considered giving people some option to transfer their savings from those banks to NUG’s interim banking system.
To be a conventional banking system is full of challenges in the interim period. To open a bank account, to ensure security, to be accepted internationally, to be legal, to change from one note to another, and to pay are the services of ordinary basic banking or financial industry.
Currently, the people of Myanmar are gradually accepting the new monetary system of NUG, which is not ordinary but a modern monetary system, using digital currency with block chain technology, and operating DMMK kyat through NUG Pay accounts. I think we will have to watch the interim banking system with an optimistic eye.