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Rival producers of Somali shillings emerged after 1991. These included the Na shilling, which failed to gain widespread acceptance, and the Balweyn I and II, which were forgeries of pre-1991 bank notes. A competition for seigniorage drove the value of the money down to about $0.04 per ShSo (1000) note, approximately the commodity cost. Consumers have refused to accept bills larger than the 1991 denominations, which has helped to stop the devaluation from spiraling further. The pre-1991 notes and the subsequent forgeries are treated as the same currency. It takes large bundles to make cash purchases. United States dollar is often used for larger transactions. The relatively stable value of the currency in the 1990s compared to the 1980s is explained by Peter D. Little in Somalia: Economy without a State as resulting from the lack of a corrupt central government printing currency to pay for military expenditures and political cronies. Traders avoid the need to carry large amounts of Somali shillings by converting them to U.S. dollars and then wiring them to money houses in Somalia. Because identification can be easily forged, those seeking to pick up wired money are required to answer questions about their clan and kinship relations. Private remittance companies known as hawala assist in the transfer of money. One of the largest such companies, Al Barakaat, was shut down in 2001 by a U.S.-led initiative due to alleged terrorist ties; the company's communications business, with more than 40,000 subscribers, was also shut down. With the establishment of the Transitional National Government in 2000, a group of businessmen imported about 30 billion shillings of Canadian-printed notes, sparking a collapse of the currency and wide-scale demonstrations and protests in Mogadishu. The value declined by 30 percent (to 13,000 per $1) in three months, and by the end of the 2001 the currency had fallen to about SoSh 22,000 per US dollar. Further imports of money caused additional disruption and the TNG was forced to buy up large amounts of money. |