Keywords — Making The Central Bank Central Again

Old Blog Import

Of the many tasks that lie ahead for Afghanistan’s new transitional government, perhaps one of the most difficult will be to rebuild a banking system. As part of its strategy to regain control of the country’s fiscal structure from the warlords and raise revenues for the government budget, Afghanistan’s central bank will issue a new currency later this year, according to central bank Governor Anwar-ul Ahady.

The central bank has 98 branches, 84 of them outside Kabul, which barely function and are not interconnected. The central bank receives little income; the warlords collect considerable customs duties from border trade, but keep that income for themselves. "Once the new government is formed, we will be negotiating with all the warlords so that they remit their income to the central bank," says Ahady. "We recognize it will not be easy."

The central bank has also developed a novel scheme to recruit new staff. Senior bank adviser Torek Faradi, 38, a former vice-president for the Bank of the West in California, says he is recruiting young Afghan refugees aged between 21 and 27 from Peshawar in Pakistan, who are computer-literate, speak English and will cost less to employ than Afghan bankers recruited from the West. "We will pay them $200 a month and train them here as bankers," he says. "We are going to be the most innovative central bank in the world."”