Houthis pledged to compensate those who hand in the newly-minted banknotes, but an official in Aden said it
Currency wars: Houthis ban banknotes issued by government-controlled central bank in Aden
The Houthi-controlled branch of Yemen's central bank in Sana'a has given merchants, money changers, banks and citizens 30 days to hand over newly-minted currency from the central bank's government-controlled branch in Aden. The Houthis have pledged to compensate those who, according to the group, have been “deceived” by the Adeni central bank.
The Houthi-run branch issued a statement on Wednesday claiming that the trading or possession of what it called "illegal currency” is “seriously damaging the national economy, the legal currency and the supreme national interest."
The currency handover measure is necessary "in the face of the systematic destructive policies of the (Aden) bank branch against the national currency,” the statement continued, arguing that the current measures are in the “public interest to curb the hyperinflation that will hit the national economy and will lead to widespread famine and suffering as each batch of this currency enters market trading.”
The Central Bank of Yemen split into rival branches in 2016, after President Abdrabbuh Mansour Hadi fled a Houthi military coup in Sana'a and established Aden as the interim capital.
Houthi authorities said they have approved compensation for private citizens with electronic cash or in the existing national currency. The deadline for the handover of the “illegal currency” is one month from Dec. 19.
An official in the central bank's Aden branch told Almasdar Online that the Houthis are using this policy decision to legitimize the theft of large sums of cash from private entities, such as exchange shops, banks and trading firms. In 2018 alone, the Houthis confiscated upwards of 150 million riyals (about $300,000) from traders and exchange shops, and have yet to return them, the official said.
When the Aden branch began distributing new 500 riyal banknotes in 2017, and new 1,000 riyal banknotes in early 2018, the Houthis banned the money and launched campaigns to confiscate it from traders and exchange shops.