'Catastrophic' repercussions if Yemeni banks cut from SWIFT, UN warns

The United Nations has warned of "potentially catastrophic ramifications" in Yemen from competing monetary authorities and a threat by the government to cut off banks in Houthi-controlled areas from the international banking system.

UN aid operations director Edem Wosornu said on Thursday that the government and the Houthis have issued "competing and increasingly stringent directives" that ban individuals, businesses, and local and international financial institutions from dealing with banks in rival areas.

"This includes a potentially imminent decision to exclude banks based in Sanaa from using the SWIFT banking system, which would prevent these banks from facilitating international financial transactions," she told the UN Security Council.

"These developments have potentially catastrophic ramifications," Wosornu said. "They threaten to further fragment and weaken Yemen's already struggling economy."

Humanitarian operations

Yemen has been mired in conflict since Houthis ousted the government from the capital Sanaa in 2014. A Saudi Arabia-led military coalition intervened in 2015, aiming to restore the government, which now operates from Aden.

The United Nations says more than half of Yemen's population - some 18 million people need humanitarian help. It has said more than two million children could face acute malnutrition and recently warned about a rapidly worsening cholera outbreak.

Wosornu said the volatile banking environment also had serious repercussions for humanitarian operations.

"If banks in Sanaa and other areas controlled by the Houthi de facto authorities are cut off from international financial institutions and networks, we will lose the ability to transfer the funds required to sustain humanitarian lifesaving operations," she told the 15-member Security Council.