A severe liquidity crisis is unfolding in Sanaa and other areas under Houthi control, threatening a total collapse of the banking sector, according to local sources.

All major banks and money exchange shops in the capital are reportedly suffering from a drastic cash shortage. Many exchange offices have already shut down after exhausting their reserves, while the few still operating are handing out damaged and worn-out banknotes, especially in 500 rial denominations.

Banks have halted all cash withdrawals, leaving customers angry and fearful of a broader economic meltdown.

The Houthis are being accused of exacerbating the crisis by forcing the circulation of damaged local currency and banning the use of new banknotes issued by the central bank in Aden.

Economists warn that if the situation continues to deteriorate, it could lead to a total shutdown of financial services in northern Yemen, as citizens lose access to their savings and essential transactions.