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Afghanistan Switching to New Currency - 2002-10-22

New currency is circulating in Afghanistan as the process of changing money is carried out by the interim government.

Afghanistan has money to burn. In a dusty Kabul lot, workers from the central bank are tossing thick stacks of banknotes into huge ovens. On this day, 40 billion Afghanis, the national currency, are going up in smoke. That's about $800,000.

The interim government of President Hamid Karzai has decided to phase out all the old currencies, for there were several different ones in circulation, and replace them with a new Afghani.

Lennart Bergstedt, an advisor to the Afghan government from the International Monetary Fund, says it is a mammoth undertaking.

"You can say that the introduction of the euro in Europe last year was something similar, but not as big event in practical means as this one," he explained. "The euro was planned to be introduced in five to seven years. And the planning horizon we have had here has been three or four months. So we're running very hard to keep the train on the track, and I think that we're doing that."

Taj Mohammad Akbar, president of one of Afghanistan's three major banks, pointed out there were too many different kinds of banknotes floating around. He explained political factions, as well as different governments, were each printing their own money.

"In this country, after the coup d'etat of 1978, different governments came into being, and each was printing money, not according to their requirements, but according to their military needs," he said. "Especially after 1992, a lot of Afghani was printed, and there were different kinds of Afghanis."

Totally redesigned banknotes with special anti-counterfeiting marks are replacing the old ones. Most are printed in Germany, except for the smallest denomination, a five Afghani note that is printed in Britain.

The new banknotes are attractive, smaller, and in smaller denominations. For example, the old $50,000 Afghani note is replaced by a $50 Afghani note. As Mr. Bergstedt pointed out, the days when changing $100 (US) into Afghanis required you to bring a suitcase to carry huge stacks of money will soon be a thing of the past.

"Up until now, when you should buy any capital goods, like a refrigerator or anything, you need a couple of guys carrying the money to pay for it," he said. "In future, you can do it in your pocket."

Destroying huge amounts of currency is a logistical nightmare. Some is being shredded. Bank employees take the shreds home to stuff their pillows, no doubt causing dreams of riches. But the shredders or pulverizers, which have also been used, simply cannot not handle the huge load of currency being turned in.

Noorullah Delawari, the central bank task force manager for the currency replacement program, came up with the idea of burning the old currency in brick kilns.

"We used the same concept and we improved upon that and we came up with these clay-type ovens, which takes a lot of money," he said. "We put up to four thousand bundles of banknotes in each. So it's an effective way of doing it."

The exchange program began October 7, and people have until December 5 to change their old money into new.