Myanmar, explained.

The exchange rate of Myanmar’s currency, the kyat, is down 80 per cent against the US dollar since the 2021 coup (Getty Images)

Myanmar’s other war: The battle for financial control

The country’s resistance movement is thwarting the junta via the banking suites and trading platforms of the world.

Sean Turnell

7 August 20254 min read

As in most conflicts, Myanmar’s wars are being fought in the financial realm as much as they are physical and kinetic.

For the military junta trying to destroy resistance to their rule, this financial war is executed by its control of the traditional fiscal and monetary vehicles of the state – the taxation system, tariffs, licence and customs duties, the earnings of state-owned enterprises, and through the use of the unique powers of the central bank.

Amidst the declining economy since the coup of February 2021, it is the Central Bank of Myanmar (CBM) that has become the lynchpin of the junta’s financing. The most obvious component of this is via the credit it provides – metaphorically “printing money” via book entries in the state accounts, and in actually printing physical cash at the CBM’s note-printing works. Printing cash (time honoured in Myanmar) is usually only limited by the lack of note-quality paper, and wear and tear of the printing plates. Of course, this expedient comes at the cost of high inflation and monetary instability. At nearly 30 per cent according to the World Bank, inflation in Myanmar is by far the highest in the region, while the exchange rate of the country’s currency, the kyat, is down 80 per cent against the US dollar since the coup.

Lacking the accoutrements of state control, Myanmar’s resistance movement has had to be more inventive in its efforts to finance its side of the war – running lotteries amongst the Burmese diaspora, selling “war bonds”, auctioning off the properties of junta leaders (settlement for later), even setting up a digital bank and a crypto-based payment system. Of course, donations (in money, in kind, and in labour – the latter critically including volunteering to fight) are the principal sources via which the resistance movement sustains its struggle.

International sanctions on Myanmar’s banks are the most direct means via which Myanmar’s resistance tries to choke off the junta’s access to foreign exchange.

But in terms of the financial war, the most visible aspect of the resistance’s campaign is its efforts to disrupt the junta’s funding – especially the flows of foreign exchange. This is achieved in various ways, including via the international financial sanctions they advocate. The countries levying sanctions in 2025 against Myanmar’s junta (and entities and individuals connected to it) include the United States, United Kingdom, European Union, Australia, Canada and a smattering of others. Singapore does not formally apply sanctions, but in its efforts to rid its financial system of compromised funds from Myanmar it does so in effect.

International sanctions on Myanmar’s banks are the most direct means via which Myanmar’s resistance tries to choke off the junta’s access to foreign exchange. Sanctioned so far are the Myanmar Foreign Trade Bank and the Myanmar Investment and Commercial Bank – two state-owned banks that were the prime conduits for official foreign exchange transactions by the junta. Meanwhile, the junta’s stockpile of international reserves have taken a hit by the decision of the United States (via the Federal Reserve Bank of New York) to effectively freeze a little over $US1 billion of assets deposited there by the CBM, an action that took place within a few days of the coup.

Naturally, Myanmar’s junta has tried to evade these sanctions by re-routing their foreign exchange activity through other banks (notably the state-owned Myanmar Economic Bank, MEB). The junta and its allies are also attempting to directly lobby sanctions-imposing bodies in the United States and elsewhere, seeking relief on a case-by-case basis. This is having some success, with the Office of Foreign Assets Control of the US Treasury lifting sanctions on a couple of individuals and entities in late July.

Against this, and against the idea that we are witnessing a change in US policy otherwise long supportive of Myanmar’s democratic opposition, has been the successful passage through critical US Congressional committees – also this July – of three new sanctions bills. One seeks to extend sanctions to include the MEB, another to continue to withhold World Bank lending to Myanmar, the third to allocate funds for humanitarian relief, outside of regime channels. Meanwhile, inspired by the actions against the Russian central bank over Ukraine, further actions against the CBM are also in the pipeline.

As with the fighting on the ground, Myanmar’s financial wars are being fought on home soil. They are also being fought many thousands of miles away in committee rooms, banking suites and on trading platforms. The stakes in both theatres of war are high.

About the author

Sean Turnell

Sean Turnell is a Nonresident Fellow at the Lowy Institute. He was previously a Senior Fellow in the Southeast Asia Program, specialising in macroeconomic policy, economic reform, and Myanmar. From 2016 to 2021, he served as senior economic adviser to Myanmar's democratic government, and was subsequently imprisoned for 650 days following the February 2021 military coup.

Topics

Myanmar