Afghanistan's financial system is on the brink of collapse, the UN warned. The US is still keeping nearly $10 billion of its reserves frozen.

·2 min read
A Taliban fighter
A Taliban fighter stands guard at a checkpoint in Kabul, Afghanistan.Rahmat Gul/Associated Press
  • Afghanistan's banking system could collapse in months, the UN warned in a document seen by Reuters.

  • Much of the country's reserves were frozen after the Taliban takeover.

  • The UN said there needs to be a way to get money to the Afghan people without helping the Taliban.

The United Nations warned that Afghanistan's banking system could collapse in the next few months, Reuters reported.

A UN Development Program document seen by Reuters said that Afghanistan's banks desperately need help, and that the negative effects on Afghan people "would be colossal" if that help doesn't come.

The report said, according to Reuters: "Afghanistan's financial and bank payment systems are in disarray. The bank-run problem must be resolved quickly to improve Afghanistan's limited production capacity and prevent the banking system from collapsing."

Afghanistan's banking system has particularly struggled since the Taliban seized power of the country earlier this year. Foreign investment halted, and Afghanistan's overseas assets were frozen to stop the Taliban from accessing them.

Experts and NGOs are now warning of dire consequences for the people of Afghanistan.

Abdallah al Dardari, head of UNDP in Afghanistan, told Reuters that there needed to be a way for Afghan people to get the money, but for it not to be Taliban-controlled.

"We need to find a way to make sure that if we support the banking sector, we are not supporting Taliban," he said.

"We are in such a dire situation that we need to think of all possible options and we have to think outside the box."

The US froze nearly $9.5 billion in assets that belong to Afghanistan's central bank after the Taliban takeover. Most of that money is held by the Federal Reserve Bank of New York.

And the International Monetary Fund and the World Bank said they were pausing their activities involving Afghanistan.

The United Nations previously warned that millions of people could starve in Afghanistan.

Multiple reports say some parents in Afghanistan are selling their children because they need money so badly.

The head of one of Afghanistan's biggest lenders warned in September that the country's financial system was close to collapse.

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