Afghan cbank’s $10b mostly not within reach of Taliban

The Taliban took over Afghanistan with astonishing speed, but it appears unlikely that the militants will get quick access to most of the Afghan central bank’s roughly $10 billion in assets.

The country’s central bank, Da Afghanistan Bank (DAB), is thought to hold foreign currency, gold and other treasures in its vaults, according to an Afghan official.

Most of the assets are held outside Afghanistan potentially putting most of them beyond the insurgents’ reach, according to Afghan officials, including the bank’s acting governor, Ajmal Ahmady, who has fled Kabul.

“Given that the Taliban are still on international sanction lists, it is expected (confirmed?) that such assets will be frozen and not accessible to Taliban,” Ahmady said in a Twitter thread on Wednesday.

“We can say the accessible funds to the Taliban are perhaps 0.1-0.2 per cent of Afghanistan’s total international reserves. Not much,” he added.

The Taliban said on Saturday that the treasury, public facilities and government offices were the property of the nation and “should be strictly guarded.”

The most recent financial statement posted online shows DAB holds total assets of about $10 billion, including $1.3 billion-worth of gold reserves and $362 million in foreign currency cash reserves, based on currency conversion rates on June 21, the date of the report. Ahmady estimated total reserves stood at $9 billion last week.

Many assets held abroad

Central banks, especially in developing nations, often park their assets overseas with institutions such as the Federal Reserve Bank of New York (FRBNY) or the Bank of England.

DAB’s consolidated statement showed that the FRBNY held gold bars worth 101,770,256,000 afghanis – at the time $1.32 billion – on behalf of the Afghan central bank in its vaults by end-2020.

The DAB’s June statement also states the bank owned investments worth $6.1 billion. The June report did not provide details of those investments, but a breakdown in the year-end report showed the majority were in the form of US Treasury bonds and bills.

Investments were made through the International Bank for Reconstruction and Development (IBRD), an arm of the World Bank, or through the FRBNY and held in New York. Among its smaller items are shares in an investment pool by the Bank for International Settlement (BIS), which is based in Switzerland, as well as the Economic Cooperation Organisation Trade and Development Bank in Turkey.

“As per international standards, most assets are held in safe, liquid assets such as Treasuries and gold,” Ahmady said on Twitter, confirming assets were all held at the Fed, BIS, through the World Bank program or other bank accounts.

Asked about the holdings, a FRBNY official said the bank does not acknowledge or discuss individual account holders, but is generally in contact with US government agencies to monitor events that may impact control of a foreign central bank.