By Min Htet Thar
The international financial system is undergoing a period of profound restructuring. For decades, the global economy has been anchored by a monetary architecture centered on the U.S. dollar and shaped by the reach of U.S. regulation. Today, as global financial infrastructure is increasingly intertwined with complex geopolitical dynamics, the vulnerabilities of developing nations that rely heavily on a single currency have become apparent. Some countries are diversifying their reserves or exploring alternative ways to settle trade to reduce their exposure to disruptions.
In this evolving landscape, BRICS has been among the groups developing alternative financing and payment arrangements. Through initiatives such as the establishment of the New Development Bank (NDB) and the expansion of bilateral currency swap agreements, BRICS members are broadening their financing options and supporting greater use of local currencies. These efforts could eventually give other developing countries facing trade restrictions access to additional payment and settlement channels. Their reach will depend on bank participation, currency availability, and whether payment systems work across borders.
Myanmar has reason to examine the experience gained with these arrangements more closely, particularly given Naypyidaw’s aim of becoming a BRICS partner. To manage external constraints and support domestic stability, Myanmar can pursue a broader approach to financial sovereignty by reducing its exposure to disruptions in any one currency or payment channel.
A Turn to Tangible Security: Re-evaluating Sovereign Reserves
Reassessing national reserves is an important part of strengthening financial sovereignty. The freezing of foreign sovereign assets has shown that access to some reserves held abroad can depend on the rules and policies of the jurisdictions in which they are held. Developing countries, including Myanmar, can review their exposure to Western banks and Western currency assets and consider holding a greater share of their reserves in physical gold. The appropriate mix should reflect the country’s need for readily available foreign currency to pay for imports and meet external obligations. [1, 4]
Gold held in domestic custody can reduce reliance on foreign custodians and on the ability of an issuer to meet its obligations. In a May 2026 commentary published by Kitco, Sprott cited Bloomberg data through March 2025 showing that global central banks’ gold holdings exceeded their U.S. dollar-denominated reserve assets on a valuation-adjusted basis. Holding more physical gold and bringing some reserves back into domestic custody could help diversify risk. The benefits should be weighed against price volatility, storage and security costs, and the time and cost involved in converting gold into foreign currency when needed.
Strategic Realignments: Trade Partnerships Under Financial Restrictions
Despite signs of a gradual normalization of ties with key regional partners, Myanmar’s international economic relations are likely to remain constrained in the near term. The European Union has extended measures that include asset freezes on designated individuals and entities. Under these conditions, Myanmar has reason to continue developing trade and economic relations with key partners, including China, Russia, Thailand, and India.
For Myanmar, reinforcing trade with these nations requires reliable payment channels. To this end, Naypyidaw can work to reduce payment frictions as it develops deeper trade and investment cooperation with Russia and other regional partners.
Implementing Local Currency Frameworks
Making greater use of local currencies could help Myanmar address some difficulties with conventional payment and clearing channels. According to Myanmar Digital News on 29 September 2026, the Central Bank of Myanmar and the Reserve Bank of India were preparing a draft Currency Swap Arrangement to support bilateral trade. The report separately described work on correspondent banking accounts. The Central Bank of Myanmar was opening a rupee Nostro account with Punjab National Bank, which in turn was working to open kyat accounts with banks in Myanmar. Such Vostro and Nostro accounts can facilitate direct bilateral settlement in local currencies.
The same report said the Central Bank of Myanmar was working with Sberbank’s India branch to facilitate the use of the rupee, kyat, and ruble. This cooperation could lay the groundwork for a broader three-currency settlement arrangement. If such arrangements prove reliable and the currencies are available when needed, they could reduce reliance on a third-party currency, support trade and investment, and help maintain supply chains for vital sectors.
Fostering Regional Resilience: The Asian Monetary Fund
While bilateral arrangements can ease some payment difficulties, establishing institutional safeguards requires deeper regional cooperation. Developing economies in Southeast Asia are highly open and deeply integrated into global value chains, leaving them exposed to rapid capital outflows and external shocks, as the 1997 Asian financial crisis showed. Naypyidaw should therefore deepen engagement with its ASEAN partners on the use of national currencies in mutual settlements and support efforts to develop the proposal for an Asian Monetary Fund (AMF).
As proposed, an Asian Monetary Fund could support regional financial stability by providing emergency lending, facilitating currency swap arrangements, and pooling regional resources to address balance-of-payments crises. It could offer lending terms better suited to regional needs. Its effectiveness would depend on how participating countries agree to fund it and on the rules they set for access to emergency financing and repayment. By taking part in these discussions and supporting the proposal, Myanmar and its ASEAN peers could help strengthen regional financial safeguards.
Conclusion
The transition toward a multipolar monetary structure gives emerging economies scope to diversify their financial ties. For Myanmar, the priorities are strategic autonomy and financial diversification. Rebalancing reserves to include more physical gold where appropriate, cultivating trade ties with regional partners, developing local-currency settlement channels, and supporting the proposed Asian Monetary Fund could strengthen Myanmar’s economic resilience. As developing countries pursue greater financial sovereignty, these arrangements could contribute to a more equitable, inclusive, and stable global economic order.
References
[1] Tan, Dongan. “The Decoupling Dilemma: How US Sanctions Erode Global Economic Governance.” International Organization 79, no. S1 (2025).
[2] Tu, Chang. “It’s time to revive plans for an Asian Monetary Fund.” Asia Times, January 2026.
[3] “Trade, Investment Ties Key to Bilateral Friendship, Economic Growth, Says President.” Global New Light of Myanmar.
[4] Sprott. “Gold overtakes dollar reserves as global trust shifts.” Kitco Commentary, 11 May 2026.
[5] Arnold, Theryn D. “De-dollarization and global sovereignty: BRICS’ quest for a new financial paradigm.” Human Geography 18, no. 1 (2025), 78–83.
[6] “EU extends sanctions against Myanmar by a year.” Reuters, 27 April 2026.
[7] Tzouvala, Ntina, and Jessica Whyte. “From Dollar Hegemony to Dollar Dominance.” Law and Critique (2026).
[8] “Myanmar, India Weigh Currency Swap to Boost Trade.” Myanmar Digital News, 29 September 2026.
e (2026).
[8] “Myanmar, India Weigh Currency Swap to Boost Trade.” Myanmar Digital News, 29 September 2026.
