
Afghan Central Bank Governor Aims to Build Confidence in Currency
(Governor outlines financial reforms, future challenges) (380) By Scott Bohlinger Washington File Writer Washington -- The governor of the Afghan Central Bank of Afghanistan, Anwar ul-Haq Ahady, said his main task is to build confidence in the new currency, the afghani, among Afghan citizens. Speaking recently at the Center for Strategic and International Studies in Washington, Ahady said he would lead by example and deposit his personal money in the bank. Afghan citizens will do likewise when they realize that their deposits are safe, he said. Before the overthrow of the Taliban regime in 2001, two versions of the afghani were in circulation, one produced by the Taliban in Kabul, the other by the opposition Northern Alliance. The new Afghan government, under President Hamid Karzai, did away with both versions, exchanging them for the new afghani at a rate of 1,000 to one. Ahady said the new afghani is trading at a fairly stable price using a modified float mechanism based on a combination of market forces and pegs. Another challenge facing the Central Bank, Ahady said, comes from the informal financial sector of money changers and the hawala, the alternative remittance system. Ahady said he does not support legal action against the informal financial sector, but believes the Central Bank will be able to win over its clients by providing cheaper and more reliable services. The hawala system, he noted, not only charges high rates for its services, but also is unreliable, sometimes causing intended recipients not to receive their money. Ahady said the Central Bank can correct problems arising from money transfers, because it keeps centralized records and issues receipts. Ahady said overall fiscal reform will be difficult to achieve if the central government can not get control over the whole country. He said that authorities in the western province of Herat have been withholding tax receipts and customs revenues from Kabul. Herat controls the important border crossing with Iran. The governor said the role of the Central Bank in the national economy will evolve as the economy develops. The overall role of foreign banks in Afghanistan is still not decided, he said, and the Central Bank will consider each application for entry into the Afghan market based on its particular merits. (The Washington File is a product of the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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