(Author: Libyan Gazette Editorial Staff)
The Presidency Council (PC) of the UN-backed Government of National Accord (GNA) has decided to accept the new banknotes that were printed in Russia by the parallel Central Bank in the eastern city of Bayda.
After the eastern bank announced the issuing of the new banknotes last week, the Tripoli-Central Bank initially warned that the move could increase inflation and could create “divisions for an important sovereign institution.”
However, Prime Minister Fayez al-Sarraj issued a statement on Thursday saying that the eastern bank and the Presidential Council found “practical and swift solutions to make use of the banknotes which were printed.”
The eastern central bank, which is loyal to the Tobruk-based House of Representatives (HoR) has printed 4 billion dinars worth of banknotes, worth 3 billion dollars.
The new banknotes will be issued on June 1 and are similar in design and size to the banknotes printed for the legitimate Central Bank in Tripoli, however the new notes have different security features, watermarks, and serial numbers.
It has been reported that the internationally recognized Tripoli-Central Bank of Libya will jointly supervise the issue of new notes with the eastern bank.
The new banknotes will circulate throughout the country in an aim to alleviate the liquidity crisis.
Libyan banks are facing a massive liquidity crisis with people waiting hours outside of banks to withdraw money due to their lack of trust in the banking system. It has been reported that bank deposits have fallen from 6 billion dinars in 2013 to 3 billion in 2015 due to people’s fears of depositing cash in the bank.
In a statement on Thursday, the eastern bank said the move was crucial to “preserve economic stability in the current period at least,” and that new banknotes were “needed to contain the crisis.”
The eastern bank also said that it had come to an agreement with the Tripoli-Central Bank and the Presidential Council during a meeting held in Tunisia earlier in May to print the new banknotes, and that their would be no conflict with the existing currency.
The US embassy issued a statement on Wednesday saying that the new banknotes would be “counterfeit” and would “undermine confidence in Libya’s currency.”