Monrovia – Since the start of 2016, the Liberian economy which experienced two recent shocks-the outbreak of the deadly Ebola virus and the decline in the prices of commodities including iron ore, rubber, and others on the world market has been experiencing downturn which is compounded by devaluation of the Liberian dollars specifically in exchange with the United States dollars-its main local trading partner.
Currency marked with security features aims to deter fraud and counterfeiting, and are identifiable by an individual, machine, Says the CBL
The two currencies are treaded as legal tenders in Liberia, making it a major problem when one- mainly the Liberian dollar falls drastically against the other as the accompanying effects are felt through increment in the prices of basic commodities on the local market.
While the Liberian dollar and the United States dollar are both legal means of purchase, many Liberian prefer carrying the United States dollars perhaps for many financial and economic reasons-the United States is not printed by the Liberian government and as such the currency is normally scare as compared to the Liberian dollars.
Besides, the United States dollar meets the essential requirements of good money- including general acceptability, stability, portability, durability, storability, amongst others, which the Liberian dollar does not meet.
During the year the Liberian dollar has basically lost some of the key characteristics of a good currency such as including general acceptability, stability, portability, durability, storability, amongst others.
A good money depends on whether it is generally acceptable in the sale and purchase of goods and services and this feature the Liberian dollar has been finding it difficult to meet.
In many commercial places, merchants prefer to sell in United States dollars and purchasers are compelled to buy United States before transacting or pay a high exchange rate than the normal pronounced by the Central Bank of Liberia.
The Liberian dollar is also not readily portable since the highest denomination is a $100 bank note and on the question of durability the currently hardly withstand the test of time. In market places the banknotes are mutilated in huge quantity further reducing the quantity of the supply of the currency on the market.
Fluctuations in the exchange rate between the United States dollar and the Liberian dollar which is also the same situation with the rate in exchange with other international currencies make the Liberian dollar unstable as traders will normally fear that keeping the Liberian dollars put them at risk on incurring losses when the Liberian dollar further deprecates in value.
These factors amongst others make the currency to be considered worthless due to the uncertainty over what is expected to happen to the currency in terms of its value in the future.
Actions to resolve
The Central Bank of Liberia in an apparent attempt to help solve some of these problems affecting the currency requested Legislative endorsement to print and replace mutilated bank notes.
In a statement issued Wednesday, the bank announced that in keeping with its statutory mandate to at all times ensure that the integrity of the Liberian Dollar is uncompromisingly maintained, it will shortly introduce a new series of banknotes into the Liberian economy.
The CBL statement indicated “This new series includes, among others, the unifying nature of the existing Liberian Banknotes, and as such, has maintained all previous portraits. The CBL has also reinforced the security features in the new series, which are both visible and invisible.
In addition, the Bank has ensured that the new series is printed on a higher quality substrate to guarantee longevity and reduce porosity. The new series also introduces a new denomination of L$500 (Five Hundred Dollars), in addition to the present denominations”.
The bank has also announced that the bank notes expected to be infuse on the market soon have security features that will prevent fraud and counterfeiting.
“The CBL also takes keen interest in tackling the two major risk issues associated with banknote lifespan, namely: soiling and porosity.
The CBL, therefore, confirms to all stakeholders, including the general public that the new series of banknotes to be released, will be fully on par with the existing Liberian Dollar Banknotes as legal tender for all transactions”, the Bank declared.
According to the CBL, some of the features of the new bank notes will help the public, professionals, machines and the bank itself to detect any counterfeiting.
Amongst some of the common ways of identifying any possible counterfeit bank notes, the bank stated that looking, feeling, tilting, using hand held devices, UV Lamp, Magnifying glass, Low Speed-Vending, ATMs and high speed-Sorting can help.
New domination introduced
One of the major improvements in the CBL attempt to handle the currency situation is the introduction of a new denomination-the LD$50 single banknote.
The new denomination will in one way or the other help in meeting some of the requirements of good money-its portability.
Trading with the new L$50 when the quantum of money involved is huge will be much easier as compared to the L$100, 20, 10 or 5.
The portability feature of the currency is clear shown in recent time when it appears that there was shortage of L$5 banknote on the local market and traders were even hesitant in accepting purchase using large quantity of L$5 banknotes since the quantum has to be so huge to meet a certain amount for purchase.
Financial experts believe that the CBL could even make more changes by introducing L$1,000 single bank note which can be useful for transactions involving huge sums of money.
The Nigerian Naira for example is printed in denominations of 10, 20, 50, 200, 500 and 1000. The one dollar Naira which was the lowest has already phased out making 10 to be the least denomination of the Nigerian banknotes.
Besides coins known as pesewas, the Ghanaian Cedis banknotes also have denominations of 1, 5, 10, 50, 100 and 1,000.
The Ivorian banknotes are also printed in denominations of 500, 1,000, 2,000, 5,000, 10,000 francs.
Liberia could also be better printing its bank notes like neighboring countries to meet the portability requirement of money.