KHARTOUM, June 13 (Xinhua) -- As Sudan's war seeps deeper into the economy, observers have warned that the continued expansion of so-called parallel monetary institutions risks splitting the country's banking system and undermining market stability.
Sudan has faced deepening turmoil since fighting erupted in April 2023 between the Sudanese army and the paramilitary Rapid Support Forces (RSF). Backed by the RSF, the Sudan Founding Alliance announced the formation of a parallel government in July 2025, and recently began setting up its own monetary institutions.
On May 11, the unrecognized parallel government established a so-called "Transitional Currency Council" to oversee cash circulation and regulate banking activity. Ten days later, it appointed Hussein Yahya Jangoul as "governor" of its so-called "central bank" in Nyala, capital of South Darfur state, southwestern Sudan. Then came reports of 500- and 1,000-pound banknotes bearing Jangoul's signature.
Although Sudan's central bank has condemned such actions, and the internationally-recognized government said it has withdrawn those notes as part of a completed currency replacement, local traders told Xinhua by phone recently that the notes are already circulating in Nyala and other parts of South Darfur.
Economist Abdul-Khaliq Mahjoub described the so-called parallel monetary institutions as a direct threat to the unity of the national economy, saying the central bank is the sole authority responsible for monetary policy and currency issuance. Any division of this sovereign function, he warned, would lead to widespread market instability.
Echoing these concerns, banking expert Mohamed Mustafa said notes circulating outside the official system lack domestic and regional recognition, warning that the absence of oversight would erode confidence and increase reliance on foreign currencies.
Different exchange rates could be produced across rival areas of control, threatening market unity and complicating trade and financial transfers, Mustafa added.
Economic analyst Ayoub Abdul-Hafeez warned that the Future Bank, operating in RSF-controlled areas, could become the foundation of a so-called parallel banking system. He argued that large, unbacked cash injections are already weakening purchasing power and fueling inflation.
Meanwhile, economist Adam Ishaq argued that the so-called "Transitional Currency Council" and the appointment of Jangoul were attempts to fill a wartime institutional vacuum.
At the market level, the Sudanese people have been voicing more specific concerns. Mohamed Bakheet, a trader from western Sudan, said merchants are facing growing difficulties in bank transfers, pricing goods, and determining acceptable payment methods across regions.
Many traders now prefer to conduct major transactions in U.S. dollars or other foreign currencies because of exchange-rate volatility and uncertainty over the future of the Sudanese pound, he said. ■