The National Bank of Kyrgyzstan has halted payments using the international SWIFT system amid political upheaval.
Authorities say this was done to, “prevent capital from leaving the country.”
New Government, No Cash
In a YouTube video published on Oct. 7, 2020, Aida Karabaeva, the chairperson of the National Bank of Kyrgystan, said authorities were freezing SWIFT payment transactions. The purpose was to prevent money from leaving the country.
The move comes as protests and riots sweep the nation’s capital over contested elections. Chairwoman Karabaeva “recommended” that all banks in the country close until the political situation stabilized. She cited security concerns.
The bank also froze domestic financial transactions and shut down electronic payment systems across the nation.
Earlier, the National Bank removed all banknotes from ATMs to prevent “robbery,” which had occurred frequently during previous periods of unrest.
You Say You Want a Revolution
Political uncertainty, it seems, is indeed the cause of these changes. On Oct. 4, 2020, mass protests broke out among opposition supporters whose candidates were not elected to parliament. They said the election had been rigged.
The powers that be attempted to suppress the protests, but were overcome. Eventually, protesters broke into the Parliament building and the President’s offices.
The mass rallies attempted to take control of strategic locations that included gold, copper, and coal mines.
On Oct. 6, 2020, Prime Minister Kubatbek Boronov resigned from office under political pressure. Sadyr Japarov, the opposition candidate, was freed from prison by protesters, and the results of Sunday’s election were annulled.
Kyrgyzstan is no stranger to popular revolutions. Two presidents have been overthrown by protesters in the last 15 years, though these revolutions have been mostly peaceful.
The small country’s politics are still of consequence to the broader region. Russia, often an ally of Kyrgyzstan, has a military airbase within the republic. It also borders the political behemoth of China.
The Kyrgyzstan Money Connection
Though asset freezing by the government may sound nefarious, the reason for halting payments is not entirely clear. Securing banknotes and other assets, as was claimed by the national bank, is likely a legitimate reason.
Similarly, some argue the move could be considered a type of transparency, as it may keep corrupt politicians from fleeing the country, embezzlements in hand.
On the other hand, halting international payments could keep money (from influential foreign powers like China) out of the hands of protesters.
With no ATMs or circulating cash, cryptocurrency may not help without clear exchange offramps. BeInCrypto has previously reported on the difficulty of laundering stolen crypto.
The Internet is still working in the central Asian nation. However, crypto payments made in good faith may only be redeemed once protests have calmed down. The country is no stranger to crypto. Police raided a mining farm earlier this year after the government had imposed taxes.
The actual use of crypto as a widely accepted form of payment is still a barrier to the technology’s full potential. Nonetheless, in the middle of a revolution, shops may simply not be open.