Monrovia – A day after the United States Embassy here issued an Alert on the worsening cash shortage at Liberia’s commercial banks, the Central Bank of Liberia (CBL) says it “is fully aware of the current liquidity pressure in the banking system, particularly the limited supply of Liberian dollars.”
As the cash shortage worsen, the US Embassy raised alarm on its website alerting American travelers of the prevailing situation, which is developing into a crisis, as many depositors leave banks daily disappointed over not being able to get their money on demand.
“Travelers should be aware that it may be difficult to obtain cash from banks in Liberia and should plan accordingly. Liberia’s banking sector has experienced a growing shortage of cash – both U.S. and Liberian dollars – over the last several months. As a consequence, it is difficult to obtain adequate cash supplies from ATMs and banks. There are no ATM facilities for public use at the U.S. Embassy. Amounts of U.S. dollars over $10,000 must be reported upon entry to Liberia. Travelers may exit with no more than $7,500 U.S. dollars,” says the US Embassy Alert.
But in a press release issued on Tuesday, December 22, 2020, the CBL blamed the cash shortage in the banks on more demand for Liberian dollars which has increased due to the Coronavirus pandemic.
“It is, however, worth noting that the pressure on the Liberian dollar this year is unusual and can be attributed to the increased demand for Liberian dollars overtime, which has been exacerbated by COVID-19.”
Some sources in the banking circle have said commercial banks have been facing difficulties in getting money from the CBL.
A banking staffer of a local commercial bank told www.newspublictrust.com last week that customers should not blame the banks, as they have not been able to receive cash from the CBL on a regular basis when needed.
For some time now, commercial banks have been rationing the level of withdrawals depositors can do, thus seriously undermining the public’s confidence in the local banking system. With the situation increasingly worsening by the day, some observers of this trend have expressed fear that the anger of depositors could blow over sooner than later.
In the wake of the current situation, the the CBL gives this explanation in its latest press release:
“In its effort to preempt this seasonal pressure, the CBL in 2019 forecast L$7.5 billion based on its analysis but was authorized to print only L$4.0 billion. This amount which was brought into the country in July this year, was inadequate to replace the current amount of mutilated banknotes and at the same meet the liquidity demand in the banking system. In spite of this constraint, the CBL has been strategically infusing the L$4.0 billion through the commercial banks with substantial amount already infused into circulation.
As additional measure, the CBL has been working with all key stakeholders, both in the private and public sectors, to mitigate the liquidity pressure. Specifically, the Bank is currently engaged with commercial banks and mobile money operators (MNOs) to promote the use of mobile money and other electronic forms of payment in addition to withdrawal of cash.
The CBL wants to re-assure the public that it is doing everything necessary to ensure the availability of both US and Liberian dollar liquidity for the festive season. The Bank has also put into place a Liquidity Monitoring Framework, including the establishment of an Internal Liquidity Management Team to respond to the prevailing liquidity challenge.
In order for the Bank to be able to exercise full monetary authority, it will need full autonomy over the printing of currency like most other central banks across the world. The recent amendment of the CBL Act to give a three-year latitude to the Bank to print without frequent Legislative approvals is a positive step in the right direction.”