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Somalia’s Central Bank governor wants creation and circulation of new currency from scratch, to replace the Somali Shilling which is less and less used.

The tattered shilling notes still in circulation – worth about 4 U.S Dollar cents – are emblematic of Somalia’s descent since 1991, when dictator Mohamed Siad Barre was toppled by warlords who carved up the country into personal fiefdoms, reports Reuters.

“We absolutely need a new currency,” said Ali, who this time became central bank governor in 2013, adding that the existing notes “are old, they’re torn, they’re dirty and they’re fake.”

With Somalia’s capital of Mogadishu changing fast and rapidly recovering from war, economic experts warn that Ali will need more than to just to just print new banknotes, as most Somalis currently use mobile money systems to carry out their daily business transactions in dollars.

Hotels in the capital have sprouted from the rubble since African Union troops wrested control of the city from al Shabaab Islamist militants in 2011. The Somali government, however, has struggled to build a financial system and pull the country’s 12 million people out of poverty.

GubanOgoJSL wrote:Sounds like a quick money scheme.

NoAngst wrote:

GubanOgoJSL wrote:Sounds like a quick money scheme.

It doesn't really matter. It's the Somali State that is issuing it and that is all that matters.

So long as a state is the sovereign issuer of the currency and its debt is denominated in its own currency, there is no problem. It will no never go bankrupt or run out of money. And it can always print money to pay for things.

A problem would arise when there is too much money chasing too few goods and services hence resulting in inflation. But we already know Somalia is no where near that scenario as evidenced by the fact that the Somali Shilling last issued some 25 years ago is still in use except when it is impractical such as with large purchases.