Thread by @finshots

Why is Cash disappearing in Afghanistan?

A thread. 👇 (1/8)

Ever since the Taliban came to power in Afghanistan, its economy hasn’t exactly been stellar. To make matters worse, the country now faces a major #cash crunch.

What’s behind this? (2/8)

For starters, the Afghani economy is highly “dollarized”: meaning that alongside Afghani (which is their currency), they use dollars for pretty much everything- from buying cola to buying homes.
In a Taliban-free world, shipments of US dollars would arrive in Afghanistan. (3/8)

And this aid was the main game in town - it accounted for 75% of domestic spending.

But once the #Taliban came to power, doling out foreign aid became a definite no-no for the US govt and the IMF. No more dollar ships. (4/8)

To top that, the US froze $9.5 billion worth of reserves belonging to the Afghani central bank. With no central bank in place, the US govt is not up for remitting all that money to the Taliban because, well, it doesn't consider this group a legitimate leadership.
(5/8)

So why can’t the Taliban just print more Afghani currency? Afghanistan doesn’t have its own printing press. Its currency is printed in a private printing press in England, alongside those of 140 other small economies. (6/8)

Now that option is off the table because this private company wouldn’t want to risk putting money in the hands of the Taliban.

That’s the recipe for a monetary disaster - ATMs running out of cash, no dollar bills coming in, global money transfer companies shutting shop. (7/8)

And as the money system collapses, prices for essential goods are soaring and fears of food shortage are looming large.

Let us know your thoughts. (8/8)

******
Enjoy reading Finshots? Check out our latest endeavor to simplify insurance- bit.ly/2YqsX0v