All Yemeni families, especially those with limited income, depend on the circulation of small old banknotes in denominations: 50, 100, 200, and 250 riyals, in order to provide their necessary daily requirements for basic food, and moving using public transportation fees within the cities. These old banknotes are the most widely used in the areas under the control of the Ansar Allah group (Houthis), amid the continuing deterioration of the economic conditions in Yemen, and the worsening of living conditions in all parts of the country.

In fact, Yemen is facing one of the most critical crises sparked by the war and ongoing conflict in the country, represented by the financial, institutional and monetary division, as two different policies were imposed in monetary circulation and the local currency exchange rate.

The areas of the internationally recognized government, which transferred the management of the operations of the Central Bank of Yemen from Sana'a to Aden at the end of 2016, circulate newly printed banknotes, while the Ansar Allah (Houthis) authority refuses to circulate them in the areas of under their influence. This ban on the new currency banknotes comes despite the Sanaa government suffering from a severe cash crisis with the destruction of old banknotes that were pumped into circulation in the first years of the war, especially small-denomination notes, even though they were intended for destruction.

These torn out banknotes are no longer valid for circulation and use, as they are shabby and damaged, unlike the rest of the cash denominations of the local currency, due to the constant need for them to complete small purchases, or pay public transportation fees while moving in city streets and neighborhoods of the main cities.

Small and worn banknotes face great pressure as they are the most widely circulated and used, but they have become rare in their unharmed condition.

Economists and bankers say that the severe crisis of cash liquidity, which forced people to deal with damaged banknotes, was the result of the state of division in the financial and banking system in the country, in addition to the failure to unify the monetary policy, and the printing of new banknotes currency without insurance cover, which led to the exacerbation of this monetary crisis in all levels.

In this context, the economic analyst, Khalil Al-Absi said in an interview with Khuyut that the financial and monetary division had disastrous consequences on the living situation of Yemenis. Its outcomes are not limited to the collapse of the local currency and the rise in prices of goods and foodstuffs, but rather extend to various aspects of living and economic sectors with the rise in internal and external commercial transportation costs. In addition, there is a severe liquidity crisis in Houthi-controlled areas due to the wear and tear of banknotes in circulation and the multiple repercussions it has had on markets and daily transactions.

On the other hand, food and consumer goods sellers and taxi bus drivers in Sanaa are complaining about this situation they were forced into and they have to deal with old, torn banknotes in light of the lack of usable alternative banknotes, as a result of the deteriorating living conditions of citizens.

The escalation of the crisis 

In light of the continued scarcity of banknotes, and the increasing severity of the cash crisis in areas controlled by the Ansar Allah group (Houthis), citizens were forced to come up with solutions such as patching up these dilapidated banknotes, trying to reassemble their torn pieces, to make it easier for them to deal with it and provide their daily basic needs.

Similarly, Citizen Mohammad Al-Kawkabani told Khuyut: “We no longer have new 100 riyal banknotes, the existing ones are all torn and destroyed, and for this reason we had to glue the torn banknotes and patch them so that we can use them. We are in daily arguments all the time with the grocery store and bus owners about accepting these damaged banknotes. But this is what is available to us. What can we do? Where do we get new money? No bank, no salaries, no state.” He said.

Moreover, economists point out that the continued circulation of damaged banknotes has serious effects on the financial market and monetary policy, as well as a unceasing waste of funds and a weakening of the national currency.

Citizens in Sanaa and the rest of the areas under the control of the Ansar Allah group (Houthis) lack any other financial options, with the expansion of the cash liquidity crisis, so that they are forced to deal with dilapidated banknotes according to the prevailing banking policy imposed in northern Yemen.

Endless quarrels

The majority of the working population of different age groups, men and women, are engaged in a state of constant daily struggle in order to dispose of damaged banknotes and obtain what they need in exchange for its market value.

Daily scenes of verbal quarrels regularly occur between consumers and shoppers on the one hand, and sellers of basic food supplies, or bus drivers on the other hand over their reluctance to ccept these dilapidated banknotes, while some of them insist on the need to replace it with some good notes.

The employee, Najiba Rassam, told Khuyut: “Some bus and store owners do not accept torn banknotes, and that is why every day I have to get into an argument with them, because there is no new 100-riyal banknote. Sometimes we pass it by mistaking the driver with it in times of traffic, and sometimes we have to harshly argue with them about accepting it." Rassam said.

The daily quarrels that residents are experiencing come in the context of expanding the extent of the suffering they have been experiencing since the outbreak of war years ago, and their loss of all means of decent living, including the cessation of payment of salaries to state employees, the lack of alternative income opportunities, as well as successive price doses, and the continued fabrication of living crises. 

Small and worn banknotes face great pressure as they are the most widely circulated and used, but they have become rare in their unharmed condition.

Amplified living burdens

The Ansar Allah group (Houthis) had prohibited citizens in areas under its control from dealing in any banknotes newly printed by the Central Bank of Yemen in Aden which is affiliated with the internationally recognized legitimate government.

On December 18, 2019, the Central Bank in Sana’a issued a decision banning the dealing in the new edition banknotes. It began to exchange all new citizens' banknotes through Sana'a Bank with old notes of "100, 200, and 250" riyals, most of which were damaged and unfit for circulation. These old banknotes were actually collected in the vaults of the Central Bank years ago, with the aim of destroying them and replacing them with a new edition later. However, the plan to print new banknotes was not done as a result of the rapid conflicting events that the country witnessed.

A former official at the Central Bank of Sanaa - who preferred not to disclose his identity - confirmed in his interview with “Khuyut” that: “All these old and damaged banknotes were pumped into the market, following the decision to withdraw the new notes. In fact, these old banknotes were collected to be disposed of, and new ones would be printed to replace it. Unfortunately, the decision to ban new banknotes did not limit the collapse of the currency, or provide alternative solutions for people.” He confirmed.

These measures led to a significant level of turmoil and imbalance in monetary policy, as the majority of Yemenis live in extremely poor living conditions.

It is worth noting that, the country's economic and commercial performance shrank dramatically, and the gap of economic deterioration was widened. In addition, the purchasing power decreased, and the levels of supply and demand fell to the lowest level with the expansion of the monetary division and its disastrous consequences on the national currency as well as the livelihood of Yemenis.