The 2021 takeover and the freezing of reserves

When the Taliban took control of Kabul in August 2021, Da Afghanistan Bank, the central bank, lost access to about 9 billion US dollars of reserves held abroad, most of them in the United States, which were frozen by governments and later partly placed in a trust. Shipments of physical dollars stopped, foreign aid, which had financed about 40 percent of GDP and most public spending, was suspended, and the banking system froze. The afghani initially fell and then stabilised through central-bank auctions of dollars paid for with humanitarian cash shipments, but real GDP fell by around 20 percent over the following two years, according to World Bank estimates, and prices rose and then fell as demand collapsed. The sudden loss of aid and reserve access explains the sharp breaks in Afghanistan's output and financial charts.