# U.S. to move $3.5 billion in Afghan central bank assets to Swiss-based trust Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-09-15 Category: BANKING Category URL: https://financedigest.com/category/banking Meta Title: US transfers $3.5B Afghan funds to Swiss-based trust to aid Meta Description: US to transfer Afghan central bank assets to new fund to stabilize economy, protect funds from Taliban, support critical imports and debt payments. URL: https://financedigest.com/u-s-to-move-3-5-billion-in-afghan-central-bank-assets-to-swiss-based-trusthtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-09-14t104015z3lynxmpei8d0dcrtroptp4afghanistan-conflict-1736815211654-compressed.jpg) By Jonathan Landay WASHINGTON (Reuters) -The United States on Wednesday announced that it would transfer $3.5 billion in Afghan central bank assets into a new Swiss-based trust fund that will be shielded from the Taliban and used to help stabilize Afghanistan’s collapsed economy. The Afghan Fund, managed by a board of trustees, could pay for critical imports like electricity, cover debt payments to international financial institutions, protecting Afghanistan’s eligibility for development aid, and fund the printing of new currency. The Afghan Fund will protect, preserve and make [targeted disbursements of that $3.5 billion](https://www.financedigest.com/elon-musk-targets-twitter-with-41-billion-cash-takeover-offer.html "Elon Musk targets Twitter with billion cash takeover offer") to help provide greater stability to the Afghan economy,” the U.S. Treasury said in a statement. U.S. officials said no [money would go to the Afghan central bank](https://www.financedigest.com/marketmind-banks-are-leaking-money.html "Marketmind: Banks are leaking money"), known as DAB, until it is “free of political interference” – diplomatic parlance for replacing the bank’s top Taliban officials, two of whom are under U.S. and U.N. sanctions, with banking professionals – and [anti-money laundering](https://www.financedigest.com/anti-money-laundering-time-to-take-a-new-approach.html "ANTI-MONEY LAUNDERING: TIME TO TAKE A NEW APPROACH?") safeguards are instituted. Until these conditions are met, sending [assets to DAB would place them at unacceptable risk](https://www.financedigest.com/analysis-watch-out-risk-assets-the-rout-in-bonds-is-coming-your-way.html "Analysis-Watch out risk assets, the rout in bonds is coming your way") and jeopardize them as a source of support for the Afghan people,” U.S. Deputy Treasury Secretary Wally Ademeyo said in a letter to the [central bank’s](https://www.financedigest.com/inflation-trumps-financial-risks-as-central-bank-tightening-set-to-continue.html "Inflation trumps financial risks as central bank tightening set to continue") Supreme Council seen by Reuters. The DAB said the [central bank’s](https://www.financedigest.com/central-banks-keep-hiking-rates-amid-banking-turmoil.html "Central banks keep hiking rates amid banking turmoil") reserves belonged to the Afghan people and their purpose was to ensure currency stability, the strength of the financial system, and facilitating international trade. “Any decision regarding the assignment, use or transfer of the reserves for unrelated goals is unacceptable to DAB,” a DAB statement said. The new foundation is based in Geneva and has an [account with the Basel-based Bank](https://www.financedigest.com/are-banks-ready-for-the-new-accountability-regime-in-2016.html "ARE BANKS READY FOR THE NEW ACCOUNTABILITY REGIME IN 2016?") for International Settlements (BIS), which provides financial services to central banks. The BIS is [establishing a customer relationship](https://www.financedigest.com/tips-for-establishing-strong-trade-relationships-overseas.html "Tips for establishing strong trade relationships overseas") with the Fund for the Afghan People. The BIS role is limited to providing [banking services](https://www.financedigest.com/20-billion-in-bank-service-fees-are-you-overpaying.html " Billion in Bank Service Fees: Are You Overpaying?") to and executing the instructions of the Board of Trustees of the Fund without involvement in the Fund’s governance or decision making,” the BIS said, adding it would comply with all applicable sanctions and regulations. The Swiss government said https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-90338.html it would support the foundation that it helped Washington [set up by contributing finance](https://www.financedigest.com/g7-finance-chiefs-agree-on-russian-oil-price-cap-but-level-not-yet-set.html "G7 finance chiefs agree on Russian oil price cap but level not yet set") and development expertise. It [named foreign ministry official](https://www.financedigest.com/italy-names-former-treasury-official-to-head-ita-airways.html "Italy names former Treasury official to head ITA Airways") Alexandra Baumann as its board representative. The [fund will not resolve serious problems driving dire economic and humanitarian crises](https://www.financedigest.com/exclusive-world-bank-seeks-more-funds-to-address-climate-change-other-crises-document.html "Exclusive-World Bank seeks more funds to address climate change, other crises -document") threatening to worsen as winter approaches. [Nearly half](https://www.financedigest.com/meta-to-take-nearly-half-of-sales-made-by-its-metaverse-creators-as-fees.html "Meta to take nearly half of sales made by its metaverse creators as fees") of Afghanistan’s 40 million people face “acute hunger,” according to the United Nations. The Taliban’s [biggest fiscal challenge](https://www.financedigest.com/open-data-represents-the-biggest-challenge-to-banks-in-a-generation.html "Open data represents the biggest challenge to banks in a generation") is developing new revenues to compensate for financial aid that provided up to 75% of government spending that the United States and other donors ended after the Islamists seized Kabul in August 2021 as the last American troops left, ending two decades of war. The [economy of Afghanistan faces](https://www.financedigest.com/euro-zone-economy-faces-growing-risk-of-recession-survey-shows.html "Euro zone economy faces growing risk of recession, survey shows") serious structural issues, exacerbated by the Taliban takeover,” a senior U.S. official, speaking on condition of anonymity, told [reporters in a briefing about the new fund](https://www.financedigest.com/bank-funding-for-renewables-stagnates-vs-oil-and-gas-report.html "Bank funding for renewables stagnates vs oil and gas – report"). The crises also have been fueled by decades of war, drought, the COVID-19 pandemic, endemic corruption and a cutoff of the [central bank](https://www.financedigest.com/central-banks-hike-rates-again-but-a-pause-is-coming.html "Central banks hike rates again, but a pause is coming") from the international banking system. State Department spokesman Ned Price told reporters that the $3.5 [billion has yet to be deposited into the new fund](https://www.financedigest.com/uk-investors-add-1-2-billion-to-equity-funds-in-march-calastone.html "UK investors add .2 billion to equity funds in March – Calastone"), but the transfer would take place “as soon as possible. Creation of the new trust [fund comes](https://www.financedigest.com/have-multi-asset-funds-had-their-day-or-is-their-best-yet-to-come-new-whitepaper-from-camradata-explores.html "Have multi-asset funds had their day or is their best yet to come? New whitepaper from CAMRADATA explores") after months of talks between U.S. President Joe Biden’s administration, Switzerland, other parties and the Taliban, who demanded the return of $7 [billion in Afghan central bank](https://www.financedigest.com/credit-suisse-54-billion-lifeline-offers-limited-respite-to-global-banks.html "Credit Suisse billion lifeline offers limited respite to global banks") assets held in the United States. The talks continued despite U.S. anger at the Taliban’s harboring of late al Qaeda chief Ayman al-Zawahiri – killed on July 31 in a CIA drone strike on his Kabul [safe house](https://www.financedigest.com/fractional-property-isnt-quite-as-safe-as-houses.html "Fractional property isn’t quite as safe as houses!") – and international outrage at the militants’ human rights crackdown, including barring girls from state-run secondary schools. Biden in February sequestered “for the benefit of the Afghan people” the $3.5 [billion in DAB assets](https://www.financedigest.com/french-asset-manager-amundi-posts-q3-outflows-of-13-billion.html "French asset manager Amundi posts Q3 outflows of billion") to be transferred into the new trust fund. The other $3.5 [billion is being contested in lawsuits](https://www.financedigest.com/using-a-persons-image-for-commercial-purposes-lessons-learned-from-the-chipotle-2-2-billion-lawsuit.html "Using a Person’s Image for Commercial Purposes: Lessons Learned from the Chipotle .2 Billion Lawsuit") against the Taliban stemming from the Sept. 11, 2001, [attacks on the United](https://www.financedigest.com/united-bulgarian-bank-selects-onespan-to-help-fight-social-engineering-and-mobile-malware-attacks.html "United Bulgarian Bank Selects OneSpan to Help Fight Social Engineering and Mobile Malware Attacks") States. [Courts could decide](https://www.financedigest.com/belgian-court-decides-to-keep-eu-corruption-case-suspect-in-detention.html "Belgian court decides to keep EU corruption case suspect in detention") to release that money, which could be deposited in the new trust fund. Another approximately $2 billion in Afghan [central bank](https://www.financedigest.com/stock-pickers-reckon-its-time-to-move-on-from-central-banks.html "Stock pickers reckon it’s time to move on from central banks") assets held in European and Emirati banks also could end up in the fund. The fund’s board also comprises U.S. Ambassador to Switzerland Scott Miller, Anwar Ahady, a former Afghan central bank [chief and former finance](https://www.financedigest.com/bootmaker-dr-martens-warns-on-profit-as-finance-chief-walks.html "Bootmaker Dr Martens warns on profit as finance chief walks") minister, and Shah Mehrabi, a U.S. academic who remains on the DAB Supreme Council. (Reporting by Jonathan Landay; Additional reporting by Michael Shields in Zurich and Mohammad Yunus Yawar in Kabul; Editing by Will Dunham, William Maclean and Marguerita Choy) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---