Aden (South24 Center)

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The internationally recognized Central Bank of Yemen issued a decision on Sunday (July 20) to relocate the headquarters of the Deposit Insurance Institution from Houthi-controlled Sanaa to the capital Aden, marking a new step in the government's efforts to consolidate control over the country's banking system.

The decision, signed by Central Bank Governor Ahmed bin Ahmed Ghaleb al-Mabaqi, follows the Houthi group's recent announcement introducing two new currency denominations, a (50-rial coin) and a (200-rial banknote). The Aden-based Central Bank condemned these moves as a serious violation of the UN-brokered economic truce agreement reached in July 2024.

In an official statement, the Central Bank described these counterfeit currencies as tools to finance illegal financial networks and a direct threat to monetary stability, warning individuals and institutions against dealing with them.

The Houthi measures have drawn international condemnation, with the UN envoy to Yemen calling them a breach of economic agreements. The embassies of the United States, United Kingdom, France, and the European Union reaffirmed that the Aden-based Central Bank remains the sole legitimate authority for currency issuance.

The Deposit Insurance Institution serves as a critical safeguard for depositors in case of bank failures. Its relocation to Aden aims to reinforce financial legitimacy and strengthen confidence among local and international banks in the government's official financial center.

These developments come as Yemen experiences deepening financial division, with growing concerns about the potential collapse of the banking system. The Central Bank's move represents the latest effort to counter Houthi attempts to establish parallel financial institutions, following their seizure of the Sanaa-based banking authority in 2016.

Financial analysts warn that the currency divide could further complicate Yemen's economic crisis, already exacerbated by the suspension of oil exports and the depletion of foreign reserves. The government has appealed to international partners to support its monetary reforms and prevent the Houthis from accessing international financial networks.