July 1, 2026

By Staff Writer | Borkena

NAIROBI, Kenya — The Central Bank of Eritrea issued a directive on Tuesday ordering all citizens and organizations to deposit all cash holdings in local currency (Nakfa) into commercial banks by the end of July, effective immediately.

In its statement, the Bank said the Nakfa remains the only legal tender for domestic transactions and that all payments must be conducted exclusively in the national currency.

The directive requires individuals and organizations to deposit all cash into bank accounts without delay. It also states that holding cash outside the banking system is illegal. Those without bank accounts have been instructed to open them and deposit their funds before the deadline.

The Central Bank warned that legal action will be taken against those who fail to comply, although it did not specify the nature of the penalties.

The order aligns with long-standing government controls over foreign exchange, money transfers, and consumer goods in Eritrea.

More than a decade ago, during a currency reform, authorities required citizens to deposit all cash into banks as part of the redenomination process. Officials said the move was intended to “control illegal money transfers and stabilize the country’s economy.”

During that period, deposits were closely monitored, and strict limits on cash withdrawals were introduced. Individuals are currently reported to be allowed to withdraw up to 5,000 Nakfa per month.

Economists say these restrictions have significantly limited business activity and reduced financial flexibility for households, affecting daily transactions and economic activity.

For major expenses such as weddings or large purchases, individuals often need to save over several months due to the withdrawal cap. In some cases, withdrawals beyond the monthly limit require approval from local authorities.

The new directive is widely seen as an effort to bring cash circulating outside the banking system back into official channels and strengthen state control over the money supply.

It also reflects Eritrea’s tightly controlled financial system, which regulates currency movement and banking activity.