Somalia

Somalia's monetary history over the past three decades is one of the most instructive natural experiments in the world, and it deserves a proper description rather than a dismissal.

A currency without an issuer

After the central government collapsed in 1991, Somalia had no functioning central bank for roughly two decades. The Somali shilling nonetheless continued to circulate — people kept using the existing notes, and private actors printed more. Its value did not collapse to zero; it settled at roughly the cost of printing and importing the notes.

Economists have studied this closely, because it tests something usually taken for granted. A currency's acceptance can survive the disappearance of the institution that issued it, for a time, on the strength of habit and the absence of an alternative for small transactions. What it cannot survive is unlimited supply, which is why the shilling stabilised at its production cost.

Mobile money instead of banking

What filled the gap was private. Telecommunications companies built mobile money systems that became the dominant means of payment, and Somalia is now among the most cashless economies anywhere — a very large share of adults use mobile money, often denominated in US dollars rather than shillings.

Alongside it, the hawala networks moved remittances from the diaspora, which are a substantial share of national income, without formal banking at all.

The lesson is that payment systems and money are separate things, and the private sector can build the first when the state cannot provide the second.

Retail trading

The Central Bank of Somalia has been rebuilding capacity, but there is no framework licensing retail CFD brokers, international banking connections are limited, and most brokers restrict clients here. A resident using a foreign firm has no local recourse.

Cautions

Mobile money is instant and irreversible. Never send funds to an individual, and treat any guaranteed return as fraud.