Afghan central bank receives new banknotes after U.S. helps clear payment – Reuters

A Polish firm delivered Afghan banknotes to Kabul this week after the United States cleared the way for Afghanistan’s central bank to make payment through international banking systems, a member of the bank’s supreme board said. Reuters Wednesday.

The payment represents a change for Afghanistan’s central bank, which has been largely cut off from the international financial system since Taliban insurgents seized power in the country last year. Some Taliban members are subject to international sanctions.

The Afghan central bank had a contract with a Polish company to print its banknotes but was unable, until early July, to make payment.

Without access to new banknotes for more than a year, Afghanistan’s cash flow has deteriorated, with notes torn to shreds or held together with duct tape, exacerbating the impoverished country’s liquidity crisis.

“Afghan markets operate primarily in cash, but existing banknotes are crumbling…The Central Bank will be able to replace old and damaged banknotes, which will improve the Afghan people’s ability to purchase food and d ‘other necessary items,’ a US State Department spokesperson said. .

Taliban accuse US of ‘usurping’ frozen assets from Afghanistan

Shah Mehrabi, a member of the Afghan central bank’s supreme council, said assurances given to banks and companies by the US Treasury that they would not be prosecuted for authorizing a transaction by the Afghan central bank, which has two members Taliban at its head, had played a decisive role. .

“These transactions which have been facilitated by the Treasury are welcomed by all Afghans,” Mehrabi said.

He said tickets started arriving on Tuesday. The contract was for banknotes worth 10 billion Afghans, mostly in small denominations. A second contract with a French company had been concluded for a similar value.

The Taliban say the central bank operates independently, but the United States has objected to two Taliban officials holding senior positions in the bank.

US to transfer $3.5 billion in Afghan bank assets to Swiss-based trust

About $3.5 billion of Afghan funds frozen by the United States are transferred to a trust fund in Switzerland, of which Mehrabi is one of the administrators.

Some economists have flagged the risk that extra money sent to Afghanistan could fuel inflation or be used to fund the Taliban’s budget if not carefully accounted for.

The Afghan central bank did not respond to request for comment. A spokesman for the Afghan Ministry of Finance said the new notes would only be used by the central bank to replace old notes, not to finance the budget.

Mehrabi said the bank would release its financial statements to ensure the money was accounted for.

Taliban’s first annual Afghan budget projects $501m deficit

He said the bank had agreed to be subject to third-party monitoring and that the US Treasury had approved an agency to carry out the monitoring.

The U.S. Treasury declined to comment, referring to a letter written in September to the bank’s supreme board that said further steps would be required for the return of Afghan assets, including demonstrating independence and submitting to “a reputable third party controller”.

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Elaine R. Knight