Abstract

The study concluded that ambiguity in Resolution No. 17 of 2024 led to misinterpretations, causing it to be seen as a directive for transferring headquarters instead of operations centres. This misinterpretation resulted in tensions between banks and the Central Bank of Yemen-Aden and prompted sanctions on six banks. While the actual transfer of headquarters is deemed unfeasible due to numerous obstacles and risks, the transfer of operations centres, although still challenging, is considered possible. Resolution No. 20 of 2024 displays selectivity by imposing sanctions on six banks while sparing others despite a unified stance among all banks. This selective application of sanctions intensifies the economic and humanitarian crisis. Instead of punitive measures, banks require support from the Central Bank of Yemen - Aden. The Yemeni economic crisis is deeply rooted and driven by various factors beyond the issue of transferring headquarters, including the halt in oil exports and the collapse of the exchange rate. Supporting the transfer of operations centres could offer a viable solution to improve conditions without inflicting substantial harm on the banking system and the broader Yemeni economy.

In their efforts to free banks from Houthi control, the study recommends that the government and the Central Bank of Yemen-Aden adopt a comprehensive strategy that includes international support and collaboration with local stakeholders. It is crucial that resolutions are evaluated for their potential economic and humanitarian impacts before implementation, with strategies developed to mitigate any associated damage. The Central Bank of Yemen-Aden should also prioritise transparency and clarity in its resolutions and focus on transferring operations centres rather than headquarters. Establishing a dedicated compliance and risk sector within the Central Bank is advised. Additionally, the recommendations underscore the importance of assessing resolutions' economic and humanitarian consequences while providing financial and technical support and incentives to encourage banks to adhere to the bank directives. The study also suggests allowing flexibility in resolution implementation and establishing a reasonable timeframe. Enhancing communication and coordination between the Central Bank of Yemen-Aden and the banks is crucial. The Governor of the Central Bank of Yemen - Aden, should lead direct negotiations with banks to enhance the effectiveness of the solutions. Additionally, the study recommends developing contingency plans to address unforeseen challenges and ensure the continuity of banking operations. Resolutions should be equitable and non-selective, with a concerted effort to meet the expectations of citizens who support these resolutions.

Introduction

The Republic of Yemen is undergoing significant economic and administrative changes amid its current political and economic conditions. A notable development is the monetary division and its profound impact on the Yemeni banking sector. Recently, the Houthi group introduced a 100-riyal metal coin, a move the Central Bank of Yemen-Aden deems a clear violation of both legal and constitutional norms. In response, the Central Bank of Yemen-Aden issued several resolutions intended to free the banking sector from the Houthi group's illegal practices. This study focuses on two critical resolutions by the Central Bank of Yemen in Aden: Resolution No. 17 of 2024, which mandates the transfer of banks' headquarters to Aden, and Resolution No. 20 of 2024, which imposes sanctions on six banks.

The study will provide an in-depth analysis of the economic, financial, and political factors that led to these resolutions, the reactions from the affected parties, and the anticipated economic and financial impacts. It will also explore the challenges and opportunities arising from implementing these resolutions and the potential obstacles and risks involved.

First: The Banking Context

Since the Houthis seized control of the Yemeni capital, Sana’a, in September 2014, the Yemeni banking sector has experienced a series of significant developments, which are outlined below:

1. Neutralisation Period of the Central Bank - Sana'a

From September 2014 to September 2016, an informal agreement and an undeclared truce between the conflict parties aimed to neutralise the Central Bank of Yemen - Sana’a and preserve its independence. This arrangement sought to maintain economic and financial stability and serve the public interest, with the Central Bank continuing its operations from its headquarters in Sana’a. However, during this period, the Houthis' disastrous policies led to the complete depletion of the country’s foreign currency reserves and triggered a liquidity crisis in the local currency by mid-2016.(1)

Monetary Division Period

Amid growing Houthi interference and pressure on the Central Bank of Yemen in Sana’a, the legitimate government decided to relocate the Central Bank's operations to Aden on September 18, 2016. Consequently, the Houthi authorities retained control of the Central Bank building in Sana’a. This led to a division of the Central Bank into two entities: the internationally recognised Central Bank of Yemen in Aden and the Central Bank of Yemen in Sana’a, which lacks international recognition.

From August 2016 to February 2018, the Central Bank of Aden was primarily focused on issuing cash to address the budget deficit.

Starting in February 2018, the bank began to expand its activities, including activating various sectors, filling key positions, and initiating institutional and capacity-building efforts. It started utilising some of its tools, such as market interventions for buying and selling foreign currencies and financing imports through the $2 billion Saudi deposit. The bank also began activating public debt instruments, overseeing the banking and exchange sectors, updating related regulations and legislation, and entering the exchange market through auctions. Additionally, it established and activated a unified financial network, initiated procedures for activating the local and international transfers account (IBAN), and represented the Central Bank of Yemen—Aden both locally and internationally.

In contrast, the Houthi group has systematically obstructed the Central Bank's operations through various practices and violations. They have maintained the Sana’a Bank as a parallel central bank, appointing loyalists to key positions such as governor, deputy governor, board members, and general managers. This control extends to government and mixed bank branches in Sana’a, where loyal figures have been installed as executive directors and board members. The Houthis have also frozen and confiscated account balances of clients and companies linked to their opponents and carried out campaigns of intimidation, threats, and arrests against bank leaders and employees in Sana’a to prevent them from reporting to the Central Bank of Yemen - Aden.

Moreover, the Houthis have obstructed the circulation of the updated local currency issued by the Central Bank of Yemen-Aden in areas under their control as of late 2019. They imposed a fixed exchange rate for the dollar, introduced rules for electronic payment services in March 2020, and enacted Law No. 4 of 2023, which banned usurious transactions and suspended laws regulating the Yemeni banking sector, thus preventing banks from earning interest on deposits and investments in treasury bills. Additionally, they issued a new 100-riyal coin. They barred banks in their areas from subscribing to the IBAN service and recently from dealing with the Central Bank of Yemen-Aden or joining the unified financial network.

The Central Bank of Yemen in Aden encountered significant challenges in addressing the repeated Houthi violations against the banking sector and the national currency. It struggled to respond decisively due to the Houthis' persistent arrogance and external interventions that obstructed its efforts to implement effective measures. However, the Central Bank has recently taken serious steps to counter these violations, including issuing the two resolutions central to this analysis.

Yemeni banks also faced immense difficulties due to Houthi practices and violations. Consequently, the banks have not taken strong stances against these practices, with their responses primarily limited to issuing statements rather than taking more assertive actions.

Second: Bank Resolution No. 17 of 2024

Article One of Resolution No. 17 of 2024 mandates that all commercial banks, Islamic banks, and local and foreign microfinance banks operating in the Republic of Yemen must relocate their headquarters from Sana’a to the interim capital, Aden, within sixty days of this resolution's issuance.

Article Two specifies that banks failing to complete the transfer of their operations centre to Aden within the stipulated timeframe will face legal actions in accordance with the Anti-Money Laundering and Terrorist Financing Law and its executive regulations. (2)

1. Transferring the Headquarters or Transferring the Operations Centre

Article 1 of the resolution addresses the relocation of the headquarters of banks, while Article 2 focuses on imposing penalties on banks that fail to move their operations centres. This distinction between transferring the headquarters and transferring the operations centre is outlined as follows:

Transferring the Headquarters: This involves relocating all aspects of the bank's headquarters to Aden. It includes moving senior management, executive management, all sectors, departments, and divisions of the bank, as well as the technical infrastructure, staff, and other necessary requirements.

Transferring the Operations Centre: This entails establishing a primary operational presence in Aden, including key specialised departments such as compliance, information technology, and international management. The goal is to facilitate the Central Bank of Aden’s access to financial and administrative data while maintaining some operational capabilities.

2. Clarity

The resolution's lack of clarity has led to misinterpretations. Banks might have responded more favourably if the resolution had addressed the relocation of only the operations centre rather than the entire headquarters. This confusion has resulted in tensions between the Central Bank of Aden and the banks.

3. Statements of the Governor and Chairman of the Presidential Leadership Council

The Governor of the Central Bank of Aden, Ahmed Ghaleb al-Ma'baqi, emphasised in multiple statements, including his press conference on May 31, 2024, the necessity of relocating only banks' operations centres. He clarified that this transfer should involve information systems, the data centre, international management, and compliance management. (3)

Similarly, during a meeting with the French Ambassador on June 2, 2024, the Chairman of the Presidential Leadership Council supported this view, noting that the Central Bank’s recent resolutions aim to compel banks under Houthi control to move their main operations management—specifically information systems, the data centre, international operations management, and compliance management—to Aden. (4)

These statements unequivocally indicate that the resolution pertains solely to the relocation of operations centres, not the headquarters.

4. Obstacles to Implementing the Resolution

The obstacles vary depending on whether the resolution is interpreted as requiring the transfer of headquarters or the transfer of banks' operations centres, as outlined below:

4.1. Transferring the Banks' Operations Centre

As interpreted in the resolution, transferring the banks' operations centres presents fewer significant obstacles than relocating the headquarters. However, there are several potential challenges and additional costs involved:

• Banks may incur extra expenses related to equipping departments essential for operations in Aden, such as the Compliance Department, International Operations Department, and the Main Information Centre;
• The transfer may involve costs related to moving existing staff, possibly hiring new employees, and providing training;
• The effectiveness of this transfer is contingent upon the Houthi group's acceptance of the resolution. Should the Houthis refuse, the associated risks and obstacles could increase, and
• The process of transferring the operations centre may take longer than 60 days, as specified by the Central Bank of Yemen in Aden's resolution.

4.2 Transferring the Banks’ Headquarters

Transferring the headquarters presents significant obstacles and risks, making the resolution extremely challenging. The following scenarios illustrate these difficulties:

Obstacles, Risks, and Impacts Resulting from the Resolution According to Possible Scenarios

Scenario 1: Houthi Approval of the Transfer Resolution (Assumed)

Even if the Houthis approve the transfer of banks' headquarters, several technical and technological challenges are likely to arise, namely:

Difficulties Related to Technical Equipment and Infrastructure for the Transfer

• The interim capital, Aden, may not have the necessary infrastructure, including suitable buildings, reliable internet, and communications systems, to meet the banks' operational needs;
• The process of relocating data centres involves significant costs due to the specialised nature of the equipment and the technical requirements associated with them;
• Technical Setup Delays: Equipping and transferring the technical infrastructure, such as information centres, to Aden within the specified timeframe may be impractical, necessitating a more extended period for setup and
• These obstacles could reduce banks' operational capacity by at least 70%, resulting in substantial service disruptions. The lack of an integrated infrastructure would weaken the ability to provide customer services, further compounded by deficiencies in basic operational infrastructure like the Internet and communications systems.

Difficulties Related to Staff:

• Transferring the headquarters would require relocating approximately 80% of the banks' staff to Aden. This involves not only moving employees but also providing support for their families to relocate;
• Some employees may be unable to move due to family circumstances, leading to staff shortages and vacant positions. Finding qualified replacements in Aden could be difficult, exacerbating operational challenges;
• The lack of adequate housing and essential services in Aden may prevent the complete relocation of staff, further complicating the transition process.
• The expenses associated with relocating employees are high, especially given the current deteriorating revenue situation of the banks and
• The inability to transfer all employees could result in job losses, increasing poverty and unemployment in the affected regions.

Difficulties Related to Huge Financial Costs

Given their deteriorating profitability, banks' inability to bear the costs of relocating their headquarters poses a significant challenge. These costs include renting new buildings, equipping them, transferring assets and technical equipment, establishing a new information centre, and covering the expenses of moving employees and their families.

Scenario 2: The Houthis Seize Bank Branches Under Their Control

The Houthis' potential seizure of bank branches within their controlled areas is one of the most dangerous scenarios resulting from the resolution to transfer the Central Bank to Aden. The obstacles and risks include:

In addition to the relocating costs, as stated in the first scenario:

• The liquidation of banks in Houthi-controlled areas would result in the loss of fixed and investment assets and credit and financing portfolios, representing the most significant part of the banks' assets. Customers would lose their current balances and deposits, leading to a banking disaster;
• This liquidation would cost the banks approximately 70% of their budget, resulting in the cessation of services in confiscated branches. These branches represent 70% of the total branches and serve 80% of customers in Yemen;
• This forced liquidation will lead banks to lose their legal status to represent customers in legal disputes, complicating the recovery of customers' rights;
• The banking system would lose the confidence of merchants, businessmen, and the general public, leading to withdrawals and cessation of deposits. This could push banks towards bankruptcy, making it difficult to regain trust;
• Banks in Aden might struggle to pay customer balances upon request, especially with exchange rate differences between Sana'a and Aden;
• The Central Bank of Yemen - Aden may be unwilling to compensate banks and depositors or manage balances and treasury bills from the headquarters in Aden;
• Bank profitability would deteriorate significantly due to the cessation of branch activities in the north while continuing to incur operating costs, including additional transportation expenses and
• The cessation of humanitarian cash assistance projects would further deteriorate the humanitarian situation in areas controlled by the Houthis.

Scenario 3: The Division of Banks and the Separation of Their Branches in Houthi Areas from Legitimate Areas

This scenario posits that the Houthis will take administrative control of transferred banks, appointing executive directors to manage the branches under their control. This has already occurred with institutions like the Central Bank of Yemen, CAC Bank, Al-Ahli Bank, Sabafon Company, and others that moved their main headquarters to Aden. The primary obstacles and risks include:

In addition to the relocating costs, as stated in the first scenario:

• Lack of confidence in the banking sector, particularly banks relocating to Aden;
• Loss of confidence in the banking system will result in customers withdrawing their balances and ceasing deposits, making it difficult for banks to regain trust;
• A significant increase in customer withdrawal requests and banks' inability to meet these demands, alongside the Central Bank - Aden's reluctance to compensate banks and depositors or to manage treasury bill balances from the headquarters in Aden;
• The liquidity crisis will worsen catastrophically, potentially halting bank operations;
• Customers ceasing deposits will drive them to the informal sector, such as the exchange sector;
• Customers from branches under Houthi control will demand their money from the new headquarters in Aden, which the banks under the legitimate government will struggle to meet, especially with the difference in exchange rates;
• Banks will be unable to provide services in areas affiliated with the Central Bank - Sana'a, representing 70% of the total branches and serving 80% of Yemen's customers. This will halt 70% of banking operations in Yemen and affect the national economy and citizens (as stated in the second scenario) and
• The banks' losses due to the aforementioned risks and increased operating costs from the relocation process will significantly impact profitability (as mentioned in the second scenario).

Scenario 4: The Inability of Banks to Relocate and the Insistence of the Central Bank - Aden on the Resolution

This scenario assumes that banks cannot relocate due to the outlined circumstances, and the Central Bank of Yemen-Aden decides to penalise these banks for non-compliance, potentially escalating measures to suspend SWIFT services or revoke licences. The consequences for the affected banks and the broader banking sector would include:

Suspension of SWIFT Services and International Transfer Companies (such as Western Union and MoneyGram) if banks fail to transfer their headquarters, which would lead to:

• Disruption of External Operations: The suspension would halt external operations, including foreign investments, import credits for goods, and both outgoing and incoming transfers. Correspondent bank accounts would be closed, causing extensive operational damage;
• Cash Flow Cessation: There would be a cessation of cash flow from international donors and expatriates;
• Impact on areas affiliated with the Central Bank - Sana'a: Areas affiliated with the Central Bank - Sana'a, representing approximately 70% of Yemen’s population, would be significantly affected. The suspension of transfers, credits, and correspondent bank closures would worsen the humanitarian crisis, increasing poverty, unemployment, and deteriorating health conditions;
• Erosion of Banking Confidence: Merchants, businessmen, and the general public would lose confidence in the banking system. This loss of trust would lead to mass withdrawals and a halt in deposits, making it challenging for banks to regain confidence;
• Surge in Withdrawal Requests: There would be a substantial increase in customer withdrawal requests, overwhelming banks and leaving them unable to meet demands;
• Shift to Informal Sector: With banks unable to accept deposits, customers would turn to the informal sector, including exchange networks and
• Severe Liquidity Crisis: The liquidity crisis would deteriorate catastrophically, potentially leading to the complete cessation of banking operations.

If licences are withdrawn as part of sanctions against banks, The situation would become even more complex. In addition to the consequences already outlined from the suspension of SWIFT services, all banking activities, services, and operations in areas controlled by the legitimate government would be severely disrupted.

5. Banks’ Response to the Resolution

In response to the resolution, banks have engaged in negotiations with the Central Bank of Yemen-Aden, interpreting the directive as a requirement to transfer the headquarters rather than just the operations centres, despite the significant differences between the two. The banks have approached the resolution responsibly, communicating through the Banks Association that while they accept the resolution, they face numerous obstacles, including financial, operational, and technical risks and potential humanitarian impacts. They have emphasised the need for support from the Central Bank of Yemen-Aden to address these challenges effectively. (5)

6. The Extent to Which the Resolution Can Be Implemented

Based on the previous analysis, the resolution presented two options for banks: transferring their headquarters or operations centres. The feasibility of implementing the resolution varies significantly depending on which option is pursued:

6.1. Transferring the Headquarters

The challenges and risks outlined across various scenarios indicate the near-impossibility of banks transferring their headquarters. Moreover, the insistence of the Central Bank - Aden on enforcing the resolution and penalising banks unable to comply, without adequate support from the Central Bank itself and the international community, presents another perilous scenario. Therefore, achieving this option remains unfeasible without the Central Bank's and international stakeholders' substantial assistance.

6.2. Transferring the Operations Centre

Transferring the operations centre poses significantly fewer risks compared to relocating the headquarters. This option may be more palatable to the Houthis, potentially mitigating the adverse scenarios previously discussed. As a result, there is a viable possibility for implementing the transfer of operations centres for banks.

Third: Bank Resolution No. 20 of 2024

Resolution No. 20 of 2024 mandates, after the preamble in its first article, that all banks, exchange companies, and remittance agents operating in the Republic of Yemen cease dealings with six specified banks: Solidarity Bank, Yemen Kuwait Bank, Shamil Bank of Yemen and Bahrain, Al Amal Microfinance Bank, Al-Kuraimi Islamic Microfinance Bank, and International Bank of Yemen. The second article requires that these banks continue providing their banking services and fulfilling their customers' obligations until further notice. The third article stipulates that the resolution will be effective from June 2, 2024 and that relevant authorities shall enforce the resolution and notify all concerned parties both locally and internationally. (6)

1. Motives for the Resolution

The resolution cites as its basis “the failure of the aforementioned banks to comply with the provisions of the law and the instructions of the Central Bank,” among other factors. However, the motives behind the resolution appear to extend beyond these legal and regulatory concerns. Several indicators suggest that complex political and economic factors drive the resolution. These include efforts to pressure the Houthis to reinforce the authority of the internationally recognised government and address financial imbalances by consolidating control over the banking sector.

2. Analysis of the Resolution

• The resolution to penalise the six banks is primarily due to their failure to relocate their headquarters from Sana'a to Aden rather than issues of non-compliance with anti-money laundering and counter-terrorism financing regulations, as outlined in the resolution;
• While the banks acknowledge the directive from the Central Bank of Yemen - Aden and do not contest the relocation resolution, they face substantial challenges in executing it without additional support from the Central Bank of Yemen;
• The claim that these six banks fail to adhere to anti-money laundering and counter-terrorism financing procedures is contested. The banks are committed to international standards and local regulations on these issues, possessing robust policies, procedures, and systems aligned with global best practices. This was corroborated by the Governor of the Central Bank of Yemen - Aden during a press conference on March 31, 2024, who stated that “the listed banks did not commit any violations related to money laundering and terrorist financing”;
• The resolution appears selectively enforced, targeting only six out of 18 banks and smaller financial institutions headquartered in Sana'a. This selective approach is notable despite a collective statement from the banks dated August 5, 2024, which highlighted the impracticality of meeting the relocation deadline and
• According to the Deputy Governor for Banking Supervision, • The six banks in question hold a significant share of the banking market, approximately 70%. As such, the resolution is anticipated to have substantial economic and humanitarian impacts, including:

Banking Sector: The resolution is poised to inflict severe damage on the targeted banks, with potential outcomes including bankruptcy and the halting of their services.

• This will lead to a contraction across the banking sector, impeding economic activity and worsening the humanitarian crisis;
• Depositors: Customers of the affected banks will encounter significant challenges accessing their funds, fostering concerns and eroding confidence in the banking system;
• National Economy: The closure of these banks will result in a stagnation of financial transactions and a decline in economic activity, further exacerbating Yemen’s humanitarian crisis and
• Humanitarian Dimensions: The resolution will adversely impact millions of Yemenis who rely on these banks for salaries, remittances, and essential needs.

Fourth:  Other conclusions

1. The Political Context of the Resolutions

The Central Bank of Yemen in Aden had previously mandated banks to relocate their operations centres to Aden, with the latest resolutions issued in August 2021. Initial enforcement saw sanctions imposed on non-compliant banks like the International Bank of Yemen. However, international pressure led to a retreat from these sanctions, disrupting the collective enforcement effort.

Recent geopolitical developments, including events in the Red Sea and the United States and Australia's designation of the Houthi group as a terrorist organisation, have created a favourable environment for the Central Bank of Yemen in Aden to renew its push for relocating banks' operations centres. This resolution, which has garnered local and international backing, underscores a shift in global perspectives on Yemen and its economic landscape, aligning with broader geopolitical interests.

2. Positive Impacts of the Resolutions

Implementing the resolution to transfer operations centres to Aden offers several benefits. It will bolster the Central Bank's capacity to supervise financial institutions more effectively, thereby reducing Houthi interference and reinforcing confidence in the banking system. This move is seen as a strategic step to safeguard the interests of all parties amid Yemen's complex circumstances and is expected to enhance the country’s financial system significantly. Additionally, the resolutions underscored the international community's support for and trust in the Central Bank of Yemen-Aden.

3. Reactions

The resolutions garnered popular support and endorsement from the Presidential Leadership Council and Yemeni factions aligned with the legitimate government. However, they faced significant opposition from the banking sector, which viewed them as a reinforcement of monetary division and a threat to the financial system's stability. Some economic experts criticised the resolutions, highlighting potential negative repercussions for the Yemeni economy.

4. Houthis as Beneficiaries and Banks as Victims

The analysis reveals that the resolutions of the Central Bank of Yemen-Aden failed to address the Houthi violations effectively. Instead, the Houthis emerged as the primary beneficiaries for several reasons:

• The Houthis aim to replace existing banks with institutions affiliated with their leaders;
• They can establish new banks in Aden that comply with the Central Bank's requirements. There is a potential for these banks to be nominally independent but effectively controlled by Houthi leaders and
• The Houthis benefit from seizing banks' assets, preparing for a potential takeover.

Consequently, the primary victims of these resolutions are the banks themselves, followed by their thousands of customers. Ultimately, disruptions within the banking sector are likely to impact the entire national economy and millions of Yemenis.

5. The Importance of Establishing a Compliance and Risk Sector

Establishing a dedicated Compliance and Risk Sector within the Central Bank of Yemen-Aden, directly reporting to the Board of Directors and adhering to international standards, is essential. This sector would be responsible for ensuring the bank's compliance with local laws and international regulations and analysing risks related to the bank's resolutions, including operational, legal, financial, and political risks. If such a sector had been in place, it could have provided critical oversight and analysis, potentially addressing and mitigating some of the challenges currently faced by the banking sector.

6. Despite their Significance, Resolutions do not address the Core Economic Issues Facing Yemen

The Yemeni economic crisis is deep-rooted and multifaceted, with factors such as the halt in oil exports and the collapse of the exchange rate being far more critical. The location of the banks' headquarters is not the primary cause of these economic challenges. Transferring operations centres may be a viable step, and it should be encouraged. country

7. Risks of Resuming Conflict

The recent resolutions by the Central Bank of Yemen - the Houthi group could potentially exploit Aden as a pretext to resume conflict, reignite hostilities, and intensify battles on the frontlines.

Fifth: Results

The study reached the following key conclusions:

• Resolution 17 of 2024 lacked clarity, leading to its misinterpretation. Improved communication and detailed explanations to concerned parties could have prevented the confusion. Banks might have reacted more positively if the resolution had been clarified as pertaining to the operations centre rather than the headquarters, which created tension between the Central Bank of Yemen - Aden and the banks;
• The study interpreted Resolution 17 of 2024 as leaving the transfer of the headquarters open in Article 1, while making the transfer of operations centres mandatory in Article 2. This interpretation aligns with statements from the Chairman of the Presidential Leadership Council and the Governor of the Central Bank of Yemen – Aden;
• Transferring the banks’ headquarters is infeasible due to technical, financial, and political obstacles. In contrast, transferring the operations centres is feasible, though it carries some risks;
• The misinterpretation of Resolution 17 of 2024 led to heightened tension between banks and the Central Bank of Yemen-Aden, resulting in sanctions imposed on six banks;
• The suspension of Resolution 17 of 2024—intended to mandate the transfer of operations centres—stemmed from its misinterpretation as a directive to move headquarters, intensifying friction between the Central Bank of Yemen and banks. Banks argue that relocating headquarters is unachievable without support from Aden and the international community, whereas progress might have been possible had the focus been on transferring operations centres from the outset;
• Resolution 20 of 2024 penalises banks for their inability to transfer headquarters rather than their adherence to anti-money laundering and terrorist financing procedures. The banks are compliant with these procedures, as confirmed by Governor Ahmed al-Ma'baqi;
• Resolution 20 of 2024 is selective, targeting only six banks despite a unified stance from all banks headquartered in Sana’a regarding the resolution;
• Enforcing Resolution 17 of 2024 to move headquarters without Central Bank of Yemen support and penalising banks under Resolution 20 of 2024 for non-compliance, risks of bank failures, service disruptions, and a contraction of the banking sector. This could stifle economic activity and worsen the humanitarian crisis, making it difficult for depositors to access their funds and eroding confidence in the banking system;
• The Yemeni economic crisis has deep-rooted causes beyond the location of banks' headquarters, including issues like the cessation of oil exports and the collapse of the exchange rate and
• Media coverage of the issue has been unrealistic and overly optimistic, highlighting the need for a more nuanced and accurate approach.

Sixth: Recommendations

Based on the study's findings, the following recommendations are proposed.

• To free banks from militia control, the Central Bank of Yemen should devise a thorough strategy with international backing and local collaboration. This strategy should assess the economic and humanitarian impacts of resolutions before implementation and include measures to mitigate potential damage;
• The Central Bank of Yemen-Aden should precisely communicate its resolutions to avoid confusion. It is essential to specify that the required action is the transfer of operations centres, not headquarters, to prevent misinterpretation;
• The Central Bank of Yemen-Aden should set up a Compliance and Risk Sector following international standards, staffed with experts in anti-money laundering and combating terrorist financing;
• Resolutions should be objective and non-selective, even if they are justified, as the primary goal should be to achieve financial and banking stability;
• Article 2 of Resolution 17, which mandates the transfer of operations centres, should be enforced with a reasonable timeline for banks to comply. This includes relocating technical systems, compliance management, and international management, which aligns with the statements of the Chairman of the Presidential Leadership Council and Governor of the Central Bank of Yemen - Aden;
• The Central Bank of Yemen-Aden should support banks for transferring operations centres. It should also enhance collaboration with the international community to secure financial and technical aid, ensuring smooth implementation without harming banks or their customers;
• The legitimate government and Central Bank should incentivise banks to comply with the resolutions. Incentives could include financial and technical support, streamlined procedures, and encouragement for infrastructure development and investment;
• Resolution No. 20 of 2024, which imposes penalties, should be reviewed in light of banks' actual capacity to comply with the resolutions and the challenges they encounter without support from the Central Bank of Yemen - Aden and the international community. A more constructive and negotiating approach should be adopted to develop practical solutions that serve the interests of all parties and ensure the stability of the banking sector
• There is substantial confidence in Mr. / Ahmed Ghaleb, the Central Bank of Yemen Governor - Aden. He should lead negotiations with banks to ensure effective solutions and improve communication channels for mutual understanding of resolutions and their implications and
• The Central Bank of Yemen-Aden should develop contingency plans to address potential complications during resolution implementation. These plans will ensure continuity of banking services and operations.

(1) مصعب محمد اليدومي، السياسة النقدية للبنك المركزي اليمني في مرحلة الانقسام للسلطة النقدية وازدواجية قراراتها، مجلة العلوم الإنسانية والطبيعية، متاح في:  https://www.hnjournal.net/en/4-12-25/، تاريخ الاطلاع: 10/06/2024.
(2) قرار محافظ البنك المركزي بشأن نقل المراكز الرئيسية للبنوك الى عدن (وثيقة)، ٢٤/٤/٢٠٢٤، 
، متاح على الرابط:  https://cby-ye.com/news/658 .
(3)عدن.. المؤتمر الصحفي لمحافظ البنك المركزي احمد غالب، ٣١/٥/٢٠٢٤، متاح على الرابط التالي: https://youtu.be/PVmed1X0fTU?si=ipEx9qRGz6NxHOvd تاريخ الاطلاع: 12/06/2024.
(4) رئيس مجلس القيادة يستقبل سفيرة الجمهورية الفرنسية، صفحة الرئيس فيس بوك، ٢/٦/٢٠٢٤، متاح على الرابط: https://www.facebook.com/share/p/ohGto1PLQdQzBBkM/?mibextid=oFDknk.
(5) مصادر خاصة بالباحث.
(6)  قرار محافظ البنك المركزي بشأن إيقاف التعامل مع عدد من البنوك والمصارف (وثيقة)، موقع البنك المركزي،٣٠ /٥/٢٠٢٤،
متاح على الرابط: https://cby-ye.com/news/691 ، تاريخ الاطلاع: 31/05/2024.