Is Cryptocurrency the Answer? Egypt’s Central Bank Limits Daily Cash Withdrawals Amid Coronavirus Crisis
Nicholas Otieno Apr 01, 2020 09:55
Egypt is facing a severe cash crunch as the country is feeling the economic pressure of the coronavirus outbreak. The central bank of Egypt has instructed local banks to begin restricting daily withdrawals and has instructed citizens not to withdraw so much money.
Egypt is facing a severe cash crunch as the country is feeling the economic pressure of the coronavirus outbreak. The central bank of Egypt has instructed local banks to begin restricting daily withdrawals and has instructed citizens not to withdraw so much money. The central bank’s current move is aimed to prevent a cash shortage and to control inflation and hoarding during the spread of coronavirus. So far, the country has about 36 coronavirus deaths and 576 infections. The closures in the nation are likely to be extended indefinitely.
Virus tests the limits of central bank power
Egypt’s central bank is under tremendous pressure as citizens are flooding the local ATMs to withdraw massive sums of cash in panic attempts to stay prepared for the worst-case scenarios. This seems to leave extremely little cash with the central bank. Instead, the central bank has issued directives to the local banks to impose cash withdrawal limits. The central bank’s new guidelines indicate that individuals will have a daily cash withdrawal limit of 10,000 Egyptian pounds ($640), while Egyptian companies can withdraw up to 50,000 Egyptian pounds. There will be exceptions for companies in case the money is being utilized to pay employees. Further, the central bank has informed local banks to limit ATM withdrawals as consumers now can only deposit and withdraw 5,000 Egyptian pounds ($316) per day at ATMs.
Moreover, the central bank has told citizens to avoid paper currency and rather to adopt electronic transfers and e-payments so that to control the coronavirus spread. As of 30th March, all banks canceled fees on e-payments and electronic transfers for the citizens’ convenience. The day prior, the central bank began an electronic payments initiative to encourage citizens to stop using physical currency (cash). All bank fees have been canceled in the country as the central bank instructed local banks to delay credit penalties against organizations and customers and not to impose late payments on certain loans.
Although there is no evidence indicating that Egyptian citizens are turning to Bitcoin amid the COVID-19 pandemic, many people seem to validate the need for cryptocurrencies. However, the central bank promotes the use of electronic payments, specifically credit cards and not any digital asset.
Blockchain as leverage to combat the coronavirus outbreak
While the world continues looking for ways to address the coronavirus pandemic, blockchain technology has proved to provide important solutions. Coronavirus has caused havoc on the world’s economy, with banks not only in Egypt but also in the US, Lebanon, and several countries have imposed cash limits. Cryptocurrency and blockchain technology is seen to have a lot to offer to the world to combat the coronavirus crisis, like offering a good alternative investment option for people. It remains to see if the coronavirus pandemic is enough to weaken the whole banking sector and make people turn to digital form of money like cryptocurrencies.
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