On July 10 the Central Bank of Liberia (CBL) began intensifying the withdrawal of mutilated banknotes from the market. This exercise started in separate locations in and around Monrovia including Red Light, Goba Chop (Red Light), Duala, Waterside, Rally Time, Old Road, and ELWA markets respectively.
The exercise comes in the wake of public outcry in Liberia about the ugly condition of Liberian banknotes; how they are rejected by sellers because they are very soft, filthy and torn. As rejection of the notes raised more concerns in the public, the CBL went on to print new banknotes with texture said to be more guaranteed than the old ones.
However, there are a few things to take into consideration as the CBL carries out its responsibilities, if the exercise would be successful. First and foremost, the CBL has not carried out enough sensitization to create awareness on the collection of mutilated notes and how to even manage them properly. Although CBL claims that a similar exercise is ongoing in other places including Gbarnga, Voinjama and Tubmanburg, the money circulates in the entire country, and if such an exercise is to be carried out, the CBL must use community radio stations and other media outlets to create awareness so that Liberians and other users will know when and where to carry their mutilated banknotes. It may be a global policy that banks do not speak too much to the media about their activities; nevertheless, there are equally some pieces of public information CBL needs to disseminate, and one of them is the exercise it has begun without much sensitization. Furthermore, these places of operation outside of Monrovia are not just enough for the exercise. What about Buchanan, Ganta, Greenville and Harper, all major points of entry in the country?
While we do not want to question the durability of the newly printed notes, it is also being noted that many users of the Liberian currency handle them without much care as compared to the US dollar and other foreign currencies. The Liberian banknotes are carelessly handled by marketers, individuals, drivers and traffic police officers, and this grossly contributes to their mutilation. Without public information about how the money should be handled, it is likely that the newly printed notes will face the same condition in record time.
Since the circulation of the newly printed notes was first announced last year, the public is yet to feel its full impact. Whenever people go to commercial banks, the same old filthy and mutilated notes are given out to people thus increasing their spread. At a point in time, Central Bank Governor Milton Weeks stated that the continuous circulation of mutilated banknotes is caused by commercial banks that do not want to release the newly printed notes to customers. This statement then raises the question: What is the role of the Central Bank of Liberia in regulating commercial banks in the country? According to CBL communications director Cyrus Wleh Badio, the CBL has the legal authority to institute any punitive measure, including but not limited to fines, if a commercial bank is found to be in violation of CBL regulations. Mr. Badio said in an effort to have the newly printed notes in circulation, the Governor has sent the “Clean Notes Directives” to commercial banks for full compliance. With this mandate in place and commercial banks being aware of CBL’s role in their regulation, people wonder why these commercial banks will stubbornly refuse to abide by the CBL directive. Is it that CBL fears taking action against commercial banks in violation of this mandate? In fact, most of these commercial banks are reportedly poor in customer service ranging from giving out batches of decayed, mutilated $5 notes and the consistent and persistent “breakdown” of their systems that frustrates customers. Is the CBL monitoring the activities of these banks?
Another issue of concern to the public is the skyrocketing exchange rate between the US dollar and the Liberian dollar. When the exchange rate exceeded L$120 for US$1 in recent days, CBL came out to lower it to L$110.
If this was done to help the situation, the problem would have been resolved long ago because similar actions were taken in the past. Though we are not experts in economics, there is a theory that says “The more the goods/supply on the market, the less the value.” We believe that unrestricted printing and circulation of more Liberian dollars on the market with fewer amounts of US dollars is one contributing factor to the skyrocketing rate, coupled with government’s demand for the US dollar, for which taxpayers are compelled to pay in US dollar.
The Central Bank can promptly deal with the unfolding financial crisis facing the country, if it is realistic to take tangible steps in creating awareness about proper handling of the money, expanding the ongoing exercise to collect the mutilated notes, closely supervise commercial banks to ensure their compliance with its rules and regulations, and studying the economy to come out with ideas that will enhance proper circulation of the Liberian currency.