Asharq Al-awsat English Middle-east and International News and Opinion from Asharq Al-awsat Newspaper

Houthis Evade Liquidity Crisis with Cryptocurrency

Houthis Evade Liquidity Crisis with Cryptocurrency

Monday, 12 March, 2018 - 09:15
Bundles of Yemeni currency are pictured at a post office before being handed to public sector employees as salaries in Sanaa, Yemen January 25, 2017. (File Photo: REUTERS/Khaled Abdullah)

Houthis revealed Sunday their plan to soon launch the “Electronic Riyal” which they're trying to implement through “Yemen Mobile” Telecom. This step comes as part of Houthi militias continued illusive efforts to overcome the multiple crises resulting from the group’s coup.

The announcement came at a time people in Sanaa and militia-controlled areas are still suffering from the domestic gas crisis, without any effective solutions to end the growing problem.

Through the eRiyal, the pro-Iranian militia allegedly seeks to face liquidity problem of the local currency after three years of the coup draining all Central Bank’s reserves to fund its war and illegal enrichment of its leaders and loyalists.

Houthi sources said a number of the group’s leaders involved in the project held a meeting in Sanaa, headed by Deputy Prime Minister of the unrecognized government Hussein Makbouli to follow-up on the implementation of the project. Observers predict this is one of the fake projects promoted by the group.

Houthis’ Saba news agency said the meeting stressed the importance of completing the legal and technical procedures of the project through coordination between all concerned parties to avoid any shortcomings or errors that may arise after the launch.

Participants also pointed out it is important to benefit from the successful experiences of some countries in similar projects in terms of "ensuring that the project is launched at a steady pace and address the financial problems” enabling some financial bodies to participate in this national project, including the Postal Authority.

The insurgency militia seeks to solve its cash liquidity problem by creating bank accounts for beneficiaries, merchants and various entities and institutions, to be dealt with in electronic currency via mobile phones.

However, bankers and traders believe the Houthi project is unrealistic and can not be implemented because of people’s lack of confidence in the coup group.

“They fear this part of a plan to their money in exchange for electronic numbers in bank accounts that can not be converted into cash,” they told Asharq Al-Awsat.

Few weeks ago, Houthis announced in a meeting with senior traders and businessmen a project, described as huge, to create a giant joint stock company with a capital of up to one hundred billion riyals.

Most traders and businessmen refused the Houthi project, which they described as delusional, saying it was just an attempt by the militia to loot their money and seize the rest of the cash in the market.

Through the eRiyal, the militia is trying to include private banks and branches of government-controlled banks in Sanaa and other provinces, particularly the state-owned Cooperative and Agricultural Credit Bank.

In the same context, the group sent a memo to all banking companies and institutions controlled by them to stop circulation of 500-riyal banknote issued recently by the Central Bank of Yemen in Aden, controlled by the legitimate government.

Despite Houthis’ circular, most citizens and traders in Sanaa continue to use the 500-riyal currency widely, indicating, according to observers, that most residents do not recognize the financial measures that the coupists are trying to impose by force.

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