Graeme Smith, a senior consultant for the International Crisis Group, told the US Senate Foreign Relations Committee that an exchange facility is needed quickly, but only as a stopgap measure.
“It is not sufficient,” he said. “Nobody should be under any illusions that this substitutes for the normal functioning of a central bank.”
Complicating the response, Taliban leaders have banned the use of foreign currency in a country where US dollars were common. The United Nations has flown in shipments of $100 bills, but the central bank has not converted them, leaving the world body sitting on about $135 million in cash that it cannot use, a UN official said last week.
Those funds are held in Kabul in the vaults of AIB, the official said, the private bank that would play a role in the new cash swap system.
The security of the cash flights and limits on how much can be delivered are key reasons for starting the new exchange facility, the note said.
World Bank and UN officials have been working to finalize the HEF, including completing a risk assessment, seeking a US Treasury license to protect international banks from sanctions, and hiring a private company to vet participants and guard against money-laundering, the note said.
David Miliband, head of the International Rescue Committee, said the consequences of Afghanistan’s economic crisis could be devastating, and he called for a change in US and international policy toward the country. —Reuters
