ULA moves to establish banking system in Arakan State

By Admin 03 Jul 2026

DMG Newsroom

3 July 2026, Mrauk-U

The United League of Arakan (ULA), the political wing of the Arakan Army (AA), is moving to establish its own banking system in Arakan State and has begun recruiting staff as part of the initiative.

According to recruitment notices, the ULA plans to operate the banking service under its own system, with 26 positions currently open. The bank is expected to provide digital financial services, including QR code payments and a mobile application.

ULA department staff told DMG that the banking system is expected to be launched by the end of 2026 and will initially operate in several strategically selected townships in Arakan State.

Business leaders said the move represents an important step toward reducing reliance on centralized financial systems, but stressed that long-term stability, accountability, and public confidence would be critical to its success.

"I welcome the establishment of a banking system because it is necessary," Arakanese businessman U Tun Kywe told DMG. "However, there must be accountability and responsibility. For example, if a merchant sells goods in one township, it is important that the money can be withdrawn elsewhere within the ULA banking network. If people cannot access their money or unexpected problems arise, the consequences will affect not only individuals but the entire state."

Businesspeople also believe a functioning banking system could help ease the financial restrictions imposed by the regime and mitigate economic disruptions caused by the conflict.

Since banking services were suspended following the resumption of fighting in Arakan State at the end of 2023, most trade and money transfers have relied on digital payment platforms such as KPay and Wave Money.

However, persistent cash shortages have forced users to pay withdrawal commissions ranging from at least 5 percent to around 15 percent at mobile money agents. The regime has also monitored, restricted, and suspended online payment accounts with large transaction volumes.

Many residents said they hope a local banking system will allow people to make payments easily through QR codes without relying on cash.

Analysts say a financial system is essential for the ULA as it expands its administrative functions, including tax collection, salary payments for government employees, trade, and public services.

"If an administrative apparatus is to function in Arakan State, financial resources are essential," Arakanese human rights activist Ko Kaung Kyaw Zan told DMG. "Taxation is a standard administrative practice around the world, so a banking system is necessary."

Observers note that the proposed banking system will face significant challenges because it lacks recognition from the regime-controlled Central Bank of Myanmar. This could affect international financial connectivity, cross border trade payments, reserve management, and public confidence in depositing money.

They also pointed out that if the ULA continues using the Myanmar kyat, it could face inflation, depreciation, and cash shortages. If it introduces its own currency or adopts foreign currencies, new challenges could emerge for people holding kyat savings or investments.

A banking expert in Yangon said the ULA may seek to build a financial system similar to those operating in parts of northern Shan State where the Chinese yuan is widely used.

"I think the ULA is trying to establish a financial system that is less dependent on the regime, possibly using the Chinese yuan," the expert said. "However, the situation in Arakan State is different from northern Shan State. The yuan is already widely used there and benefits from China's support. In Arakan State, adopting a foreign currency still faces significant challenges, while relying solely on the Myanmar kyat would expose the system to inflation and depreciation. It will likely take considerable time to establish a stable banking system."

DMG has sought comment from Arakan Army spokesperson U Khaing Thukha regarding the planned banking system, the currency to be used, and financial guarantees, but had not received a response at the time of publication.

Banking experts and businesspeople believe the ULA could initially operate a digital banking system using the Myanmar kyat before gradually expanding to support more stable foreign currencies.