After the departure of the US troops from Afghanistan, Western Union has suspended its services in Afghanistan. However, it is unclear whether the suspension is temporarily or for permanently. But there was a huge customer-base of Western Union in Afghanistan. There were millions of Afghan who were heavily relying on the Western Union services for the purposes of receiving remittances into Afghanistan.
Since the US had waged war on Afghanistan, a large number of young Afghans moved into other countries. They migrated for better living and for finding ways and means to support their families financially which were still living in US-occupied Afghanistan.
An opportunity was created and Western Union, the world’s biggest remittance service provider, grabbed that opportunity by extending its remittance business there. In a matter of few days, Western Union was able to remit millions of dollars into Afghanistan on daily basis. The business continued to grow since 2002 till the US troops evacuated Afghanistan very recently.
Now the condition of remittances into Afghanistan has become dilapidated. The financial institutions existing in the country have imposed limitations on funds’ withdrawals. However, a large population of Afghans, whose livelihood was based on foreign remittances, are now adopting crypto remittances. But the question is whether Afghanistan are capable of dealing with crypto? Are they not the most vulnerable people who now have no other option but to rely on crypto remittances?
According to IMF crypto as an alternate to local currency isn’t the best option for any country, and Afghanistan is no exception. In case a country embraces crypto as an alternate to local currency then there are consequences. IMF describes the consequences as triggering of inflation in the first place.
Consequently, the local currency loses its value and in the worst case scenario, the local currency becomes entire worthless. So at least IMF does not recommend embracing of crypto by any country, although El Salvador has integrated Bitcoin as currency.
There is complete stand-still in the financial system of Afghanistan. A major percentage of country’s GDP was made up of foreign funding i.e. aid which represented 40% of the total GDP. However, with the Talibans taking over the country, foreign aid has been curtailed.
While there is more than US$9 Billion kept as foreign reserve with the Central Bank of Afghanistan, yet they too have been frozen. There is hardly any system left in the country which could enable an Afghan to gain access of global financial system. There is literally no way that remittances can come into Afghanistan, except for crypto.
Afghanistan is a country which heavily relies on real hard cash. In these circumstances, it is a matter of life and death for the public living in the country. So the only life line available to Afghans is the embracing of crypto. The embracement of crypto may well become the end solution for Afghanistan, which is currently a “failed state”. There are various examples in the past where failed states embraced crypto and that they are now on the road to stability.
Is crypto going to be the life line for the vulnerable Afghans?