Yesterday, the Egyptian central bank issued a directive limiting all cash withdrawals from banks over fears it will run out of currency.
Egypt is feeling the economic pressures of the coronavirus pandemic and is now instructing its citizens not to take out so much cash.
Egypt Limits Cash Withdrawals
On Sunday, Egypt’s central bank instructed all banks to limit daily withdrawals. According to the decree, the daily limit for individuals will be 10,000 Egyptian pounds ($640) and 50,000 pounds for companies. [The National] There will be exemptions for companies if the money is being used to pay employees.
ATMs in the entire country will also be limited. Going forward, users can only withdraw and deposit 5,000 Egyptian pounds ($316) at ATMs. All bank fees will also be canceled in the country.
Thus far, Egypt has around 576 coronavirus infections and 36 deaths. The closures in the country currently in place will be extended “indefinitely.”
Bank Panics Becoming a Growing Fear
With the coronavirus pandemic worsening, many are looking to withdraw cash over fears that their savings could disappear. As BeInCrypto reported, some banks in New York experienced shortages as their wealthier customers sought to take out large amounts at once. The Fed has also been actively reassuring citizens that their cash is safe.
The potential banking crisis extends well beyond the United States, as you might expect. Egypt is just one of many countries that have imposed cash limits. Italy, for example, enacted such restrictions in December—well before the coronavirus pandemic.
Bank panics were thought to be a thing of the past but have reappeared as of last year in multiple countries. During the Hong Kong protests, for example, ATMs were known to run out of cash. China also experienced multiple bank runs in November 2019.
Egypt, therefore, is not alone in experiencing the cash squeeze. It is happening globally. However, it remains to be seen whether the current crisis will be enough to topple the banking sector. Citizens may soon find that their funds are no longer safe in banks, with alternatives like gold or Bitcoin becoming more attractive.
In all, the case for blockchain technology and cryptocurrencies is becoming clearer. However, given today’s economic woes, many simply don’t trust the burgeoning cryptocurrency sector. It will likely take years to build up trust, but the conditions of the world economy make a strong case for alternatives to fiat currency.