As US continues to freeze Afghanistan bank assets, UN fears massive financial collapse

On Monday, the United Nations (UN) urged world leaders to address Afghanistan's bank-run situation in order to avoid the collapse of the banking sector. As per a report by Sputnik, a three-page analysis of Afghanistan's banking and financial system stated that now is the moment to consider all options, including out-of-the-box solutions to the situation. The economic cost of a financial system collapse would be tremendous, with terrible societal consequences.

The UN Development Programme (UNDP) said that with their considerable expertise in the Afghan financial system - coordination with international financial institutions, such as the World Bank and the International Monetary Fund - would be important. By the end of the year, almost 40% of Afghanistan's deposit base will have possibly vanished, and non-performing assets will have reached such dangerous levels that banks will not be able to survive the next six months, according to Sputnik.

The United States has halted $8.5 billion in annual aid to Afghanistan

The Taliban's interim Foreign Minister Amir Khan Muttaqi urged the United States to address the country's humanitarian and economic situation on November 17. He sent an open letter to US Congress stating that right now, their people's most pressing issue is financial security, and the origins of this anxiety can be traced back to the American government's freezing of their people's assets. The United States has frozen Afghanistan's $9.5 billion in foreign exchange reserves. Following the Taliban's seizure of power on August 15, the crises in Afghanistan have only worsened.

Because of an approaching humanitarian disaster in Afghanistan, Pakistan and China have backed the Taliban's request to unfreeze the cash. The US special envoy to Afghanistan, Thomas West, said that Muttaqi's letter misrepresented the reality surrounding the country's economic and humanitarian problems. He stated that for years, US officials made it clear to Taliban that if they pursued a military takeover rather than a negotiated settlement with fellow Afghans, critical non-humanitarian aid from the international community would all but stop.

World powers have urged Taliban to build an open, inclusive administration

West said the US would continue to provide humanitarian help to the Afghan people if the Taliban earned credibility by taking efforts to combat terrorism and form an inclusive government. A series of discussions between world powers at various levels have urged the Taliban to build an open and inclusive administration, according to Sputnik. However, Interim Foreign Minister Muttaqi stated on November 12 that the current government is inclusive.

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