Yemeni Presidential Council and Central Bank Clash Over Key Decisions, Leading to UN-Requested Reversal
Confidential sources within the Yemeni Presidential Leadership Council have disclosed a dramatic dispute with the Governor of the Central Bank of Yemen. Sheba Intelligence has learned that this conflict arose before the recent reversal of the Central Bank’s controversial policies.
According to Sheba Intelligence based on a government source, the Presidential Leadership Council had previously supported all Central Bank decisions, provided they demonstrated "maximum flexibility." However, recent actions by the Central Bank—such as the suspension of the SWIFT code and the prohibition of transactions with several major banks and their financial networks—were executed by the bank's management without prior consultation with the Presidential Council.
The source indicated that the Council assessed these decisions as harmful to living conditions, humanitarian efforts, and the overall economy. The measures were considered damaging to major banks, which need sufficient time to relocate their operations from Sanaa to Aden. Additionally, these decisions were seen as potentially escalating military conflict with the Houthis.
It is important to note that the internationally recognized Yemeni government surprisingly reversed the Central Bank's recent decisions last Monday. This reversal was in response to ongoing threats from the Houthis against both the Yemeni government and Saudi Arabia. Acting on the UN Special Envoy's request, the Yemeni government agreed to retract these measures and enter into negotiations with the Houthis. As a result of this, Governor of the Central Bank resigned from his post. Yemeni presidential council collectively refused the governor’s resignation, insisting on the governor to continue on his work. This highlights the deep rift between the presidential council and the central bank on the banking sector policies.
On May 30th, the Central Bank of Yemen in Aden, declared the temporary capital of the country, issued a decision to suspend transactions with six Yemeni banks and financial institutions located in areas under Houthi control, after the expiration of a 60-day deadline for them to relocate their headquarters to Aden. Additionally, the bank issued another directive urging all individuals, commercial establishments, companies, other entities, and financial institutions holding old paper currency, pre-2016 issue year of various denominations, to deposit it within 60 days from the announcement date. The Central Bank also revoked the licenses of 26 exchange companies and ordered the indefinite closure of their branches due to violations of the bank's regulations and instructions.
These decisions followed two previous resolutions mandating a unified internal remittance network, banning dealings with 12 unlicensed electronic payment entities, and permanently halting operations in local financial transfer networks owned by banks, financial institutions, or exchange companies operating in Yemen. All these measures constituted a parallel war on the economic front in Yemen, with the Yemeni government attempting to gain an advantage over the Ansar Allah Houthi group, who have been threatening to resume their military operations.