The agreement between Sberbank and the Ministry of Finance and Revenue of the Republic of the Union of Myanmar covers three areas: direct settlements, the development of digital financial technologies and the exchange of regulatory experience. The document formalizes the cooperation that the bank has been building during the preparatory period.
The backbone of the scheme is the Indian branch of Sberbank. It is through it that payments are made in Indian rupees, a currency that connects Myanmar counterparties with the Russian market, as well as with India, Belarus and the CIS countries. Previously, settlements required the involvement of intermediaries in third countries, which lengthened the chain and added currency risks.
"BEAC launches direct settlements with Myanmar ... expands horizons for Russian business and launches new tools for working in the Southeast Asian market. The bank has completed preparations to launch a direct settlement mechanism with Myanmar, which removes dependence on a chain of intermediaries in third countries," the bank said in a press release.
The declared infrastructure is primarily focused on large government contracts and significant commodity flows. The bank positions the solution as a full-fledged payment system, rather than a point-to-point tool for one-time transactions. A multiple reduction in the duration of operations and a reduction in currency risks are two effects that the bank has identified as practical results for participants in foreign economic activity.
Myanmar is one of the Southeast Asian countries with which Russian business is increasing its trade turnover amid the reorientation of logistics and financial routes. A direct payment channel through the rupee opens up the opportunity to integrate Myanmar partners into a broader settlement network that already covers India and the CIS countries. The next step is how quickly the bank scales its infrastructure beyond government contracts to the medium—sized business level.
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