By Air Force Tech. Sgt. Kevin Wallace
Special to American Forces Press Service
Aug. 19, 2008 - U.S. forces here are using commercial banking services to bolster Afghanistan's economy by putting about $100 million worth of monthly business transactions into private banks. Abdul Qadeer Fitrat, the Central Bank of Afghanistan's governor, and officers from 101st Joint Logistics Command met at Camp Eggers on Aug. 7 to sign a memorandum that changed the banking relationship between U.S. forces and the Central Bank.
Monetary procedures between the Central Bank and U.S. forces will remain intact to help reduce volatility in the exchange rate of the afghani, Afghanistan's unit of currency, Fitrat said. In the end, he added, business will still flow to the smaller private banks. Central Bank is eager to support transition efforts, Fitrat said.
The Central Bank will convert the U.S. dollars to afghanis and then transfer the currency to commercial banking services, explained Army Maj. Noah Cloud, 101st JLC finance officer. The Central Bank will have to remain engaged in the transactions.
"The Central Bank uses U.S. dollars to purchase [Afghan currency] on the open market," Cloud said. "[This] allows the Central Bank access to foreign currency reserves, which are necessary to the legitimacy of the Central Bank in the eyes of the International Monetary Fund and the World Bank Organization."
Private banking is critical to economic development in Afghanistan, Fitrat said. The ultimate goal is to build confidence in Afghan banks, agreed Cloud.
"The more confidence we can build in Afghan banks, the more vendors will utilize them for payment via electronic funds transfers," Cloud explained. "This new [process] paves the way for U.S. forces to utilize private banks in Afghanistan for commercial services. This is vital, because previously the Central Bank provided commercial services to our forces."
In years gone by, Afghanistan did not have a substantial private banking infrastructure or an economy to support it, Cloud said. As the nation continues to develop, both the Afghan government and coalition forces must continue to find ways to help bolster Afghanistan's development.
Fitrat agreed cooperation and progress must come from both sides, and he said he said he shares the vision of a strong relationship between the Central Bank and U.S. forces.
(Air Force Tech. Sgt. Kevin Wallace serves in the Combined Joint Task Force 101 Public Affairs Office. Army 1st Lt. Meagan Newsom contributed to this story.)