LBDI Pres. Endorses CBL’s Call for Printing Money, But…

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John B. S. Davies, III: "That is a radicle recommendation. "A lot of faith in the existing currency of banknotes has been lost."

The president of the Liberia Bank for Development and Investment, John B. S. Davies, has expressed his agreement with Central Bank of Liberia’s call to print L$27.5 billion to stabilize the cash flow in the country, but warned that the current cash shortage problem will not be solve if the currency remains the same.

Mr. Davies, who is also president of the Liberia Bankers Association, explained that in the midst of lack of public confidence in the current banknotes, it is prudent that the CBL change the money with a new note to avoid hoarding, which will still cripple the banking sector once the currency is not changed.

For him, if the old currency is not replaced with a new one, rather just printing the old volume of the same banknotes, it will worsen the crisis as people will not bring the money to the bank. Innstead, they will continue to withdraw and keep it at home.

“[If you print the same old money], the people will just add up what they already got but, when it is changed, they will be forced to bring it,” Mr. Davies said, according to FrontPage Africa. “We hold the view that it is not additional banknotes to increase the existing currency banknotes that is required to deal with this matter, it is a wholesale change of the existing currency of banknotes.”

Mr. Davies added that the public has lost interest in the current banknotes circulating in the market since the majority of them are all mutilated, so it will be prudent for the lawmakers to grant the CBL request of printing new money that will give the economy a new face.

Such a move, the LBDI President said, is crucial for the country to strengthen its monetary policy and an opportunity to clearly understand the reason for the shortages of the country’s currency on the market, and identify the hoarders.

“That is a radical recommendation. A lot of faith in the existing currency of banknotes has been lost. It is just what the market believes because of all the relatively unanswered questions about who has what and where it is,” he added. We will see where it is coming from. It gives our monetary policymakers the opportunity to do what we call national strategy research. The money comes in, they see it, they track it, and they know how to hold it based on how it infuses out,” he said.

Meanwhile, Mr. Davies had warned people to stop kicking against the idea of changing the money because of cost. Rather, they should support the government’s move collectively if they want to see the economy doing better, or it will serve as “a continuous distraction for this government and it will be a distraction for any government in the future as we continue to side-step this issue.”

Earlier, CBL Executive Governor J. Aloysius Tarlue told lawmakers during his appearance at the House of Representatives this week that the country needs L$27.5 billion to stabilize the cash flow in the country, as L$22.5 billion is already out of the banking sector.

The money, the CBL said, is needed to respond to the blanket outlook of the downward trend of the economy and will buy up government debts, a move probably designed to keep borrow costs low, but Governor Tarlue failed to state if the money will be the same legacy note or a new one.

“The issue of paucity of the Liberian dollars is a grave concern, and whether we need additional banknotes or we need new banknotes, the fact is we need money on the market to be infused into the economy in three years period,” Governor Tarlue told lawmakers.

The money, Governor Tarlue added, will be printed at a cost of US$21 million equivalent to about L$3.4 billion, while revealing that the recently printed L$4billion is part of L$25.3bn of which L$22.5bn is currently outside the bank.

Governor Tarlue added that the L$10 billion of the money in the banking sector is mutilated because it has lived its lifespan. Tarlue also blamed the coronavirus pandemic for the country’s present economic woes, but “stressed that the economic outlook can be redeemed certainly with the printing of the new banknotes.”

However, Finance Minister Samuel Tweah shut down the CBL’s argument and said that the printing of more banknotes would not solve the crisis until public confidence is restored in the banks.

“Printing money is not the solution. So even when we print new money the problem cannot be solved,” Min. Tweah said when he appeared on the 50-50 talk show. “And the reason why it cannot be solved is the quantity of money that is not coming back but staying outside of the banks.”

Min. Tweah further said that printing new money will become better when public confidence in the banking sector is restored, which is intended to ensure that people trust their bank to save their money instead of hoarding it.

 “Certain people will have to keep their money outside until confidence is restored. This way, they will start to bring it in since you can account for it,” Min. Tweah added.

Tina S. Mehnpaine is a graduate of the Peter Qua qua School of Journalism. She came as an intern in January 2020, after several months of hard work and dedication; she is now a full working reporter at the daily observer newspaper. She has interest in environment, women and children, health, politic. Contact reporter, tmehnpaine@gmail.com WhatsApp, 0886425103, and 0770774641

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