People carry food aid they received from a local charity in Sanaa, Yemen, June 5, 2016. REUTERS/Khaled Abdullah
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As civil war engulfs Yemen, the central bank is so committed to staying neutral that it pays salaries of soldiers on both sides.Central banks play an important role in many economies but in Yemen, which has been plagued by a war for more than a year, it is keeping the country from financial collapse and the population from running out of food. The Central Bank of Yemen is based in the capital Sanaa, which isn't even controlled by the internationally recognized government. The CBY represents the last bastion of the financial system in the impoverished country and is effectively running the economy, according to central bank officials, foreign diplomats and Yemeni political sources on both sides of the war. Any sign that Yemen's fiscal policies and dwindling foreign exchange reserves – used to pay for imports – are being mismanaged could lead to a further fall in shipments, central bank and political sources said.With little means of replenishing its foreign exchange reserves, the central bank has burned through its dollars to pay for imports and keep up Yemen's foreign debt obligations.
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