IPNews-Monrovia: In a rather unfortunate manner, the Central Bank of Liberia-CBL, with powers to monitor the day to day flow of currency and ensure monetary stability in Liberia is attributing the shortage of the Liberian dollors to the refusal of the Natiomal Legislature to approved its requested amount of 75 Billion Liberian dollars to stabilize the Liberian monetary crisis.

In a release Monday, November 9, 2020, the Central Bank of Liberia announced that it is taking measures in keeping with its statutory mandate to ensure that adequate Liberian Dollars are provided to the population through the commercial banks in the country.

The CBL states that it is currently infusing liquidity in the Commercial Banks to address the shortage, but says it will be done gradually so as to maintain a low inflation volatility aimed at protecting the purchasing power of ordinary citizens.

The CBL Statement issued through the Ministry of Information Cultural Affairs and Tourism, states that the bank current restrictive operational autonomy granted it under the CBL Act constrains the bank from taking measures to effectively address the increasing demands for Liberian Dollar.

“We had requested the printing of 75-billion Liberian Dollars in 2019, but the legislature only approved 4-billion at the time. This means with increasing demands from several factors to include economic and population effects, dollarization, mutilation and economic precautions, the need now for the printing of more liquidity cannot be overemphasized” the bank asserted.

“Of the 4-billion Liberian Dollars printed in 500-Bills, only 50-percent, meaning half of the 4-billion printed, has been infused in the market which represents the ratio of about 1-to-10 of new to old banknotes in circulation”, the bank said.

The CBL attributed the current Liberian Dollar liquidity problem to several factors, including the effects of COVID-19 on the economy, but said it has begun working with various stakeholders, as well as the International Monetary Fund, the National Legislature and other players to find a lasting solution.

The Central Bank renewed its appeal to the public to focus on using other mediums of payments, like mobile money and POS to carry out daily financial transactions which will ease the burden of having direct access to liquidity.

Barley nine months into the Government of President George Weah, the government was slapped with allegation of the  mysterious disappearance of L$16 billion from the vault of the Central Bank of Liberia (CBL).

The Government moved quickly to established a Special President Investigative Team (PIT)  and the Monrovia City Court subsequently restricted the movement of 35 employees of the bank pending the outcome of the investigation.

The involvement of the court was triggered by a Writ of Ne-Exeat Republica prayed for by authorities at the Ministry of Justice (MoJ) to restrain persons of interest from leaving the jurisdiction of the court pending an action.

The PIT was headed by Alex Cuffy. The PIT comprises of the Liberia Anti-Corruption Commission (LACC), National Security Agency (NSA), Liberia National Police (LNP), and the Financial Intelligence Unit (FIU).

On February 8, 2019, the PIT submitted it report capturing major issues such as reviewing the fiscal monitoring system; withdrawal of the mutilated banknotes and establishing the total amount of LRD in circulation; the robust monitoring of commercial banks income and vault balances, among others.

Subsequently, on November 2019, the CBL announced a number of monetary policies to stabilize prices and revive the economy, after many false starts by the Economic Management Team. Among these was a reduction in the Liberian Dollar reserve requirement (RR) from 25% to 15% , and an increase in the US Dollar RR from 10% to 15%. Contrary to this an additional LD$4 billion was printed for injection into the economy.

Unfortunately, those measures were meant to make the LD more accessible in the market, but this have not served the purpose. A political observer told IPNews.

The question still remain to be ask: where is the Liberian Banknotes? Why can’t depositors access their money when they visit at various commercial banks?

A professional Bank tells IPNews that within the banking system, there is only a fraction of customers cash deposits that are stocked in at various commercial Bank  vaults and ATMs.

The 25 years experienced Banker says there is percentage placed on each  LRD and USD assets in reserve at the CBL -which is the reserve requirement or RR. While the rest of deposits are kept  to serve account withdrawals or disburse as loans and other types of investments.

“The CBL (like other central banks) keeps each bank’s reserves, in case of an emergency. Like when a bank needs to pay a high volume of panicking account holders trying to get their money out, based on fears that the institution will become insolvent – what they call a “bank run.” The RR creates a buffer so that if commercial banks run out of cash – and they shouldn’t – they will call on their reserves so that depositors may access their monies when they want it.” The Banker narrates.

The RR is also a principal tool central banks use to increase or decrease money supply in the economy and influence interest rates. Depending on the money supply in the economy, the central bank board can increase or decrease the RR. An increase in the reserve requirement takes more money out of the commercial banks and puts it into the central bank. A decrease does the opposite. So the CBL has to be vigilant about what is needed at any given time, so they can adjust the RR and either pull currency from circulation or release it. Another Banking expert explained.

“The July 26th and Christmas/New Year seasons are when LRD most urgently need to be released. That’s now. So where’s the money that should have been held in reserve. Are they at risk? Nonexistent? Either way, that would be a big problem.” The Banker wonders.

As this lingering question of ‘Is the Weah’s government in office or in Power?’, Liberians continued to plunder over the active performance of government  functionaries are yielding the anticipated results for its citizenry? Watch out for Part III