The United Nations on Monday pushed for urgent action to prop up Afghanistan's banks, warning that a spike in people unable to repay loans, lower deposits and a cash liquidity crunch could cause the financial system to collapse within months.

In a three-page report on Afghanistan's banking and financial system seen by Reuters, the U.N. Development Programme (UNDP) said the economic cost of a banking system collapse - and consequent negative social impact – “would be colossal.”

An abrupt withdrawal of most foreign development support after the Taliban seized power on Aug. 15 from Afghanistan’s Western-backed government has sent the economy into freefall, putting a severe strain on the banking system which set weekly withdrawal limits to stop a run on deposits.

“Afghanistan's financial and bank payment systems are in disarray. The bank-run problem must be resolved quickly to improve Afghanistan's limited production capacity and prevent the banking system from collapsing,” the UNDP report said.

“Afghanistan last year imported about $7 billion worth of goods and products and services, mostly foodstuff ... If there is no trade finance the interruption is huge,” he said. “Without the banking system, none of this can happen.”

https://english.alarabiya.net/News/world/2021/11/22/Afghanistan-banking-system-at-risk-of-collapse-cost-could-be-colossal-UN-report