BAGRAM AIR FIELD, Afghanistan (August 19, 2008) — U.S. forces here will now utilize commercial Afghan banking services, which will bolster Afghanistan’s economy by putting approximately $100 million worth of monthly-business transactions into private banks’ hands.

Abdul Qadeer Fitrat, the Central Bank of Afghanistan’s governor, and officers from the 101st Joint Logistics Command met at Camp Eggers, Aug. 7, to sign a memorandum which changed the banking relationship between U.S. forces and the Central Bank.

Monetary procedures between the Central Bank and U.S. forces will still remain in tact to help reduce the volatility of the Afghani exchange rate, said Fitrat. In the end, business will still flow to the smaller private banks.
Central Bank is anxious to support transition efforts, said Fitrat.

The Central Bank will convert the U.S. dollars to Afghani and then transfer the currency to commercial banking services, explained 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 Afghani on the open market,” said Cloud. “[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 the economic development in Afghanistan, said Fitrat. 

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,” said Cloud. “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 the years gone by, Afghanistan did not have a substantial private banking infrastructure or an economy to support it, said Cloud. 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 progression must come from both sides and said he shared the vision of a strong relationship between the Central Bank and U.S. forces.

(Army 1st Lt. Meagan Newsom contributed to this story.)