The Importance of Somali Shilling and the US Dollar Towards Economic Stability of Somalia.

Somalia is a distinctly severely politically and economically distressed country. The country has a peculiar monetary order as US dollar dominates most monetary transactions. The only currency issuance signaled by the Central Bank of Somalia is the Somali shilling currency but both in its issuance and in the economy its use is very minimal. Cross border trade and large scale trading activities, basic services provision, and other monetary exchanges has become reliant mostly on the US dollar. The situation is further more complicated due to the growing upward development of cashless financial operations, which have changed the landscape of trade but have also increased the level of reliance on foreign currency. The primary dominant currency formulation has had its own advantages and shortcomings. The Somali shilling is meant to be the national currency, viewed as a shield for the country’s sovereignty and its economy but suffers gradual and substantial currency depreciation, a retreat fromfree domestic market or circulation of currency, and unfavourable perception by the people. In contrast, the us dollar domination gives a gradual consistency and intergretion into the world economy but causes an economy to be too dependent on the economy of the country which issues the us dollar. In addition, it greatly affects the central bank’s currency-control abilityto manage the economy. There is also the introduction of other digital financial platforms that were initiated by local operators like telecom and some banks.