Afghanistan’s Central Bank working to shift economy from cash to cards

Da Afghanistan Bank (DAB), the country’s central bank, says it is stepping up efforts to reduce Afghanistan’s dependence on cash by promoting the use of electronic payment systems—including bank cards and automated machines—as part of a broader financial modernization agenda.

DAB spokesperson Hasibullah Noori announced that systems are being designed to enable users to carry out transactions through all types of automated payment technologies, a move aimed at improving transaction speed and reducing physical currency degradation.

People will be able to use electronic cards for their financial transactions, Noori said, adding that this will help reduce the wear and tear of paper money and also improve transaction efficiency.

The initiative, while modest in scope so far, signals the central bank’s intention to shift Afghanistan’s heavily cash-based economy toward a more digitally enabled financial ecosystem.

Afghanistan remains one of the most cash-reliant economies in the world, with the vast majority of daily personal and commercial transactions conducted using physical currency. This dependency is driven by multiple longstanding challenges including limited banking penetration, particularly in rural areas where over 70% of Afghans live.

International isolation and sanctions since the Islamic Emirate’s return to power in August 2021 have also led to increased challenges as Afghanistan deals with restricted access to the global banking system, frozen assets, and a reliance on informal transfer networks like hawala for both private and humanitarian finance.

Although DAB is promoting the use of electronic cards, many experts argue the supporting infrastructure is virtually nonexistent in most areas. Outside of Kabul and a few provincial capitals, point-of-sale (POS) terminals, card readers, and payment networks are rare.

Additionally, many of the cards currently in circulation are linked to limited-use payroll accounts for civil servants or NGO employees and are not widely accepted in markets, transport systems, or shops.

Economic analysts say however that before pushing digital payments, the central bank must invest in foundational infrastructure, including mobile banking systems, merchant acceptance networks, and public financial education.