Cover: Original illustration commissioned by Kandaka, 2026.
Money is a promise. A Sudanese pound is accepted today because the person receiving it expects somebody else to accept it tomorrow. When that confidence disappears, households and businesses protect themselves with dollars, gold, goods, property or anything else likely to hold value.
Sudan’s monetary crisis is therefore not a narrow problem for the Central Bank. A farmer cannot price an imported pump when the exchange rate may change before harvest. A factory cannot plan when wages, power, machinery and working capital move at different speeds. A bank cannot make useful long-term loans when repayment money may lose much of its value. Stable money is development infrastructure.
The latest official monthly bulletin available when this article was published shows how far stability remains. The Central Bank of Sudan reported annual inflation of 41.6 percent in July 2026, down from 51.3 percent in June. Broad money was 41.5 percent higher than in December 2025. At 31 July, the reported average dollar-buying rate was roughly SDG 3,552 at commercial banks and SDG 4,572 at exchange bureaus. These preliminary wartime statistics do not capture every informal transaction or region. The Bank then issued further exchange-rate amendments on 24 August, confirming that the framework was still moving.
Sudan faces several possible responses: restore the pound through stronger institutions, back it with gold, install a currency board, permit competing currencies, or abandon it for a foreign currency. The strongest course is neither a return to the classical gold standard nor immediate permanent dollarization.
Sudan should investigate a temporary, legally constrained stabilization regime for the pound, supported by independently audited gold and diversified liquid foreign reserves. It should end routine central-bank financing of government, publish the true monetary and reserve position, use a realistic exchange rate, protect lawful savings and move—only after credibility returns—toward a modern inflation-targeting framework.
Gold can strengthen the promise. It cannot substitute for keeping it.
Why inflation persists
It would be wrong to attribute all inflation to “printing money.” War destroys production, blocks roads, displaces workers and makes fuel, food and transport scarce. Exchange-rate depreciation raises import prices. Damaged farms, refineries, banks and communications systems can push prices upward without a new banknote being issued.
But supply shocks become more destructive when the monetary and fiscal system accommodates them indefinitely. Sudan-specific IMF research has found reserve money, the exchange rate and private credit to be important inflation drivers after South Sudan’s secession. Fiscal shortages, currency creation and depreciation can reinforce one another:
government lacks finance → central bank creates money or credit → demand for foreign currency rises → the pound depreciates → imports cost more → prices rise → people avoid pounds → government needs still more pounds.
This does not mean responding to famine or war by withdrawing money until the economy collapses. It means monetary stabilization cannot succeed while the Treasury, military enterprises, state-owned companies or other public bodies create obligations that ultimately return to the Central Bank.
Why gold is attractive—and dangerous
Gold appears to offer what Sudan’s political system has repeatedly failed to provide: a limit. A government can create pounds; it cannot create gold by decree. Sudan is also a major producer. The Central Bank recorded about eight tonnes of gold exports worth $1.135 billion in the first half of 2026, roughly 63 percent of recorded merchandise-export earnings.
Gold could diversify reserves, impose a visible limit on monetary expansion and convert part of a national resource into a lasting financial asset. But only if the holdings and the liabilities they support are independently verified.
Sudan has already experienced the opposite outcome. After South Sudan’s secession, domestic gold purchases were financed in ways that created local-currency liquidity. Unless a central bank removes that extra money through other operations, buying gold can itself expand the money supply. Unrefined gold is also not automatically a usable reserve asset: it must be assayed, refined, certified, transported, insured and securely stored.
The public must be able to verify:
- how much gold was acquired and at what price;
- who produced and sold it;
- whether armed actors or politically connected firms benefited;
- its purity and custody location;
- whether it has been pledged, swapped or sold;
- how it is valued; and
- whether the same gold supports more than one promise.
A “gold-backed pound” announced before those questions are answered would be a slogan, not a system. The institution Sudan needs first is an independently verified chain from mine to refinery to audited reserve.
Comparing the main choices
| Option | Potential benefit | Main danger | Judgment for Sudan |
|---|---|---|---|
| Classical gold standard | Hard issuance rule and direct convertibility | Requires large accessible reserves and can force deflation or suspension in a crisis | Not recommended |
| Gold-and-reserve-supported pound | Visible constraint while preserving a national currency | Fails if reserves, sourcing or issuance remain opaque | Best stabilization option to investigate |
| Currency board | Fixed conversion backed by liquid reserves | Requires full credibility and severely limits emergency lending | Possible fallback, probably too rigid initially |
| Full dollarization | Immediately removes the state’s power to print the main currency | Ends monetary sovereignty, lender-of-last-resort capacity and seigniorage; requires enough dollars | A constitutional last resort |
| Parallel legal currencies | Protects transactions and savings during transition | Can deepen dollarization and create currency mismatches | Useful temporarily with safeguards |
| Inflation targeting | Flexible, modern long-term framework | Needs credible statistics, instruments and fiscal discipline | Appropriate later, not on day one |
No option removes the need for functioning banks, honest statistics, fiscal discipline and political legitimacy.
A Sudanese monetary constitution
Sudan should examine a statutory framework built around seven connected rules.
1. Publish what backs the money
The Central Bank should publish monetary liabilities and separately identify monetary gold, liquid foreign exchange, securities, deposits, pledged assets and disputed or unusable claims. An independent opening audit must physically verify the gold and confirm which assets are unencumbered.
After that audit, law could establish a rising minimum reserve-coverage ratio for a clearly defined measure of base money. Gold should be valued conservatively. Liquid foreign assets must remain a substantial share because Sudan pays for fuel, wheat, medicine and machinery in currencies—not bullion.
2. End routine monetary financing
Existing authority for temporary advances to government should be narrowed. Ordinary salaries, subsidies, military spending and public-company losses cannot become recurring Central Bank claims.
Emergency financing should require a legally defined emergency, approval by a legitimate legislature or specified transitional authority, a strict ceiling, a short expiry, immediate disclosure, independent audit and a repayment or absorption plan. Every government calls its priorities urgent; the law must distinguish an emergency from habitual insolvency.
3. Make the Central Bank independent and answerable
Independence should prevent a president, minister, general or party from ordering currency creation. It must not shield the Bank from scrutiny. Board members need published qualifications, staggered terms, conflict-of-interest rules and removal only for defined causes. Audited accounts, reserve reports and policy decisions must appear on schedule, and the governor must answer publicly to a legitimate parliament.
4. Use one realistic exchange-rate framework
An official rate that few people can access becomes a rationing system for insiders. The Bank should publish how the rate is determined, how much it intervenes, and who receives any preferential foreign-exchange window. Intervention may reduce disorderly volatility; it should not defend an invented number until reserves disappear.
5. Audit the gold supply chain
Only certified monetary gold should enter reserves. Purchases need competitive pricing, beneficial-ownership checks, mine-of-origin records, responsible-sourcing controls and independent physical verification. Sudan must decide openly how much gold to retain and how much to sell for liquid foreign currency. Hoarding gold while essential imports go unfunded would be as irrational as selling everything and retaining no reserve.
6. Protect savers and banks
Citizens should be allowed transparent, regulated foreign-currency accounts during the transition. Confiscation or forced conversion would accelerate capital flight. Banks should disclose the currency composition of deposits and loans; businesses earning pounds should not be encouraged to borrow unhedged dollars.
Government can create legitimate demand for pounds by collecting taxes and paying domestic obligations in them. It must earn that demand by stabilizing the currency, not criminalize citizens for protecting their savings.
7. Treat hard backing as a bridge
Once inflation is low, fiscal financing is controlled, reserves are adequate, statistics are credible and banks function, Sudan can gradually move toward a published inflation target and a flexible exchange rate. A target announced before the instruments exist would reduce credibility each time it is missed.
Should Sudan dollarize?
Dollarization’s attraction is clear: Sudan could no longer print the currency used for most payments. It could reduce exchange-rate uncertainty in dollar-denominated trade. But it would also surrender monetary policy to the United States.
The Central Bank could not create dollars during a banking panic. Sudan would lose the revenue from issuing currency. Domestic money would depend on exports, remittances, aid and capital flows; if dollars left the country, money and credit could contract at the worst moment. Remote and unbanked communities could face severe cash-access costs.
Dollarization also does not create the dollars required to dollarize. Converting existing balances and supporting banks requires a credible stock of foreign currency. Ecuador shows that dollarization can impose discipline, but also that adjustment is painful and inflation does not disappear instantly. Zimbabwe’s more recent gold-and-reserve-supported ZiG gives the complementary warning: reserve language could not prevent devaluation when liquidity and fiscal operations expanded; greater stability followed tighter policy and reduced monetary financing.
Monetary sovereignty has little value when used to impoverish the public. But surrendering it permanently should require clear evidence that a less irreversible system cannot work.
Foreign payments need not be exclusively in dollars
Rejecting dollarization does not require every foreign payment to use pounds. Firms should settle trade in currencies agreed with counterparties. Reserves may include dollars, euros, renminbi and Gulf currencies according to the currencies used for essential imports, exports, debt service and safe liquid assets. Regional African clearing arrangements may reduce some third-currency costs.
Replacing exclusive dollar dependence with exclusive dependence on another foreign currency would solve little. Diversification should reduce risk, not accumulate illiquid bilateral balances that cannot finance a crisis.
Removing zeros is not reform
Redenomination could eventually simplify prices, accounts and banknotes. It does not create wealth or stop inflation. If one new pound equals 1,000 old pounds, both salaries and prices lose three zeros. If monetary financing resumes, the zeros return.
Brazil’s Real Plan is useful because it did more than exchange notes: a temporary accounting unit helped align prices and contracts while fiscal and monetary measures attacked inflation. Sudan might one day study such a unit for contracts, taxes and public accounts, but only with a credible price index and functional payment system. Redenomination belongs near the end of stabilization, after inflation has remained low enough for new notes to survive.
A practical sequence
First six months: tell the truth. Publish an independently verified Central Bank balance sheet; identify usable reserves, pledged assets and government claims; disclose all direct and indirect public financing; stop new routine monetary financing; adopt one transparent exchange-rate framework; protect lawful deposits; and restore timely inflation, money, fiscal and reserve statistics.
Months six to twenty-four: build the constraint. Establish and publish the reserve-coverage rule; create independent audit and reserve-management committees; formalize gold traceability and refining; resolve insolvent banks transparently; develop instruments to absorb excess liquidity; and rebuild cash and interoperable low-tech digital payments.
Years two to five: earn normal money. Keep inflation in single digits before relaxing the stabilization rule; lengthen pound-denominated savings and finance voluntarily; introduce formal inflation targeting only when credible; consider redenomination after durable stability; and review democratically whether the system should evolve, tighten into a currency board or—if repeated compliance still fails—give way to dollarization.
Progress should be measured through inflation, monetary growth, the gap between exchange rates, Central Bank financing of government, reserve coverage, gold holdings and encumbrances, audit timeliness, currency exposure, deposit growth and the cost and maturity of productive credit.
What Sudan must not do
Sudan should not declare a gold-backed pound without publishing the gold. It should not promise convertibility it cannot honour, defend an unrealistic exchange rate for insiders, confiscate lawful foreign-currency savings, place all reserves in one asset, remove zeros and call it stabilization, or grant Central Bank “independence” without audit and democratic accountability.
And it should not impose the entire cost on households while military enterprises, public companies and politically connected institutions remain outside the budget.
The recommendation
Sudan probably should not restore a classical gold standard. It should not permanently dollarize unless serious attempts to rebuild a constrained national currency fail.
The best option is a Sudanese monetary constitution: a pound supported during stabilization by audited gold and diversified liquid reserves; a transparent exchange-rate framework; a legal prohibition on routine deficit financing; narrow emergency exceptions; an independent but accountable Central Bank; protected savings; and eventual movement toward inflation targeting.
This would use gold without worshipping it. It would preserve monetary sovereignty while placing it on probation.
The test is not whether a redesigned note looks impressive. It is whether a worker can hold it without being robbed by inflation, whether a farmer can sign a contract before planting, whether a bank can finance a factory for five years, and whether any future civilian or military government is prevented from turning the public’s money into its private emergency fund.
Trust will not return because the state orders it. It will return when the rules are visible, the reserves are verifiable, government lives within those rules and the pound keeps its promise.
Sources
- Central Bank of Sudan, July 2026 Economic Bulletin — latest available official monthly inflation, money, banking and exchange-rate indicators at publication.
- Central Bank of Sudan, post-April 2023 circulars — 2026 exchange-rate, gold, trade and banking-policy amendments, including the 24 August exchange-rate circulars.
- Central Bank of Sudan, Foreign Trade Statistical Digest, January–June 2026 — recorded gold exports and merchandise trade.
- Central Bank of Sudan Act 2002 — statutory powers, governance, reserves, gold and advances to government; any future legal design must verify subsequent amendments.
- IMF, Sudan: Selected Issues (2013) — Sudan-specific evidence on inflation, money, exchange rates and monetary transmission.
- IMF, Zimbabwe: 2025 Article IV Consultation — evidence on the ZiG, liquidity expansion, monetary financing and later stabilization.
- World Bank, Sudan Economic Update 2025 — conflict, economic contraction, inflation and recovery context.
Research was refreshed on 4 September 2026. Official wartime data remain preliminary and incomplete; this article does not claim that recorded gold exports equal Sudan’s audited monetary reserves.