Banking expert Walid Dalil writes:… Decisions of the Bank of Sudan
Decisions of the Bank of Sudan regarding its circular on Tuesday, raising the ceiling for transfers through banking applications to 15 million pounds per day instead of 3 million pounds.
The Bank of Sudan also set the daily withdrawal ceiling through bank windows at 300 million pounds per day
The daily withdrawal through ATMs is set at 50 thousand pounds per day
These measures will lead to the cessation of commercial activity in the markets, and the authorities will then be forced to cancel the decision, as the pound continues to collapse.
The recent accelerated collapse of the currency is normal due to the cessation of economic activity and the cessation of the movement of goods for many reasons. It is expected that the agricultural season will fail. Estimates of the economic contraction since the outbreak of war are more than 70%
The absence of the state, the cessation of tax revenues, the cessation of the work of tax offices, in addition to the failure to import goods and the cessation of customs revenues, is a catastrophe of great magnitude.
Possible effects of these actions:
- Lack of liquidity: If there is a cap on withdrawals from banks and ATMs, people’s fears of not being able to access their money may increase, which may lead to an increase in demand for cash outside the banking system.
2 Lack of confidence in the banking system: Strict restrictions may reduce public confidence in national banks, leading to withdrawal of deposits and increased retention of cash outside the banking system.
3 Disruption of commercial transactions: Restrictions on financial transfers may affect business and trade, as it is difficult to pay suppliers or receive payments from customers, which constitutes a burden on economic activity.
4 Informal economy: Restrictions may lead to the growth of the informal economy as people begin to engage in alternative ways to the banking system in order to meet their financial needs.
5 Currency smuggling and the black market: Restrictions on remittances can lead to increased currency smuggling and the spread of the black market for cash
6 Inflation: If the restrictions result from problems in the country’s financial balance, such as a shortage of foreign currencies, the restrictions imposed may lead to inflation and devaluation of the currency
7 Protests and social instability: Monetary restrictions, especially if they are sudden and severe, may lead to protests and social instability as a result of financial pressures on the population.
The central bank must be careful in setting limits on financial transfers and withdrawals from banks and ATMs, and take comprehensive consideration of their effects on the economy before taking any action.
