The two rival Libyan central banks (CBL) apparently have ironed out their disagreements and agreed to circulate banknotes both from the bank in the east situated in Bayda and also from the west situated in Tripoli.
The UN, the Libyan Government of National Accord and the international community for the most part recognize the Tripoli-based central bank as the sole legitimate bank.
The bank is receiving bank notes printed in the UK. The rival bank in Bayda in the east set up by the Tobruk-based House of Representatives (HoR) has already received notes printed in Russia and they are being distributed in the east.
A recent tweet said following a meeting between officials of the two banks: " Very short conclusion - agreement to share/distrubte newly printed banknotes jointly. 50m LYD on way to Tripoli, Libya".
The eastern banknotes had previously been declared "counterfeit' by the US Embassy in Tripoli and had also been rejected by the GNA, but after a meeting with the Bayda bank officials the government reversed position. This probably did not sit well with either the US or the UN.
The UN has specifically warned parties that they should only deal with officials from the GNA and not from parallel institutions. The HoR is a parallel government and its central bank a parallel institution. Pragmatism no doubt trumps principles in this case, as Libya faces a shortage of cash that has reached crisis proportions with demonstrations and huge queues at banks to withdraw cash.
The Libya Herald reports that the governors of the two banks agreed that they would work together as a team and design a "unity plan" for the whole economy. Governor of the Bayda CBL Ali Hebri, met with the governor of the Tripoli CBL Saddek Elkaber in Tunis.
The two agreed that their banks would accept imported currency from either side. Apparently, 50 million of the dinars printed in Russia have been sent to Tripoli from Bayda. The two agreed not to attack each other in the media. It is not clear whether Hebri's initiative was approved by the HoR. HoR tried to fire Elkaber back in September of 2014 but he did not step down and is recognized by the UN and GNA now.
In Tripoli at least the crisis is far from over. One tweet provides photos of queues and line ups:"Nadia Ramadan @NadiaR_LY 4h4 hours ago.This is how a bank in #Tripoli look like today. The Liquidity crises remains unsolved #Libya." Another tweet complained: "Son queued frm 10am until 4pm to withdraw money from bank . . . returned empty-handed #Tripoli #Libya". Perhaps the crisis will ease soon. Ramadan begins tomorrow.
There is continuing confusion and contradictory statements about the status of newly arrived banknotes printed in Russia for the Tobruk-based House of Representatives (HoR) government. At first the Presidential Council of the UN-brokered Government of National Accord rejected the bills and the US Embassy issued a statement saying the bills were counterfeit.
However, after a meeting between GNA authorities and those of the HoR, the GNA reversed its position claiming that the notes would actually help solve the cash shortage in Libya. However, the head of the Tripoli based Libyan Central Bank (LCB) still rejects them, apparently.
As TunisiaLive puts it: " At the time of writing, Libya’s GNA controlled Central Bank appears to have rejected the legitimacy of the Eastern Dinars, though the GNA itself has accepted the notes as an alternative to their own. It is not currently clear if Tunisia will recognise one or both currencies." The UN position and that of many countries is that there is only the one LCB based in Tripoli and supporting the GNA. However, declaring illegitimate, banknotes that the GNA recognizes is a strange way to show support.
The Tripoli-based CBL announced that it had received 112.5 million dinars worth of new banknotes yesterday. It posted a photo of a plane being unloaded. The banknotes are printed in the UK by De LaRue. However, none of the notes seem to have been distributed as yet. The CBL also claimed that another 250 million banknotes should arrive by the middle of the month.
However, critics say that a complete list of cargo planes arriving at Mitiga airport at Tripoli showed no cargo planes had arrived. The critics say that the money must have arrived earlier and being hoarded or else it did not arrive at all. A recent tweet notes: "#Tripoli sources: despite CBL announcement that currency was delivered, still no cash in the banks today. #Libya". The Tripoli CBL has made no more statements about the issue and denied that the Governor of the bank would hold a press conference on the issue. The new banknotes are to be distributed throughout Libya.
The critical shortage of cash has prompted new demonstrations in Tripoli. They are described in the Libya Observer and also the Libya Herald. The PM of the GNA Faiez Serraj has called for an urgent meeting between the two rival central banks and the HoR Finance Committee to help solve problems. The black market rate of Libyan dinars required to buy a US dollar is going up, reflecting the uncertainty being created.
The situation is not being improved by the recent arrival of the GNA in Tripoli. Protesters against the cash crisis also complained about low living standards and poweroutages since the new GNA took power. The GNA and the UN are calling for unity with the GNA but the eastern part of the country is still being governed by the HoR and so far it has not voted confidence in the GNA as required by the Libyan Political Agreement(LPA). The LPA requires that the commander of the Libyan National Army (LNA) would relinquish his position to the Presidential Council(PC) of the GNA. General Khalifa Haftar and his supporters reject this and want him to remain in his position.
The eastern banknotes are already being put into circulation. A tweet reads:"New bank notes from #Libya Central Bank Al-Bayda arrive to the cities of Jalu, Awjila and Jakharrah, a total of 5mil" More are expected to be distributed this week end. The eastern notes should also be distributed in the west in areas controlled by the GNA but it is not yet clear whether this will happen.
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Ken is a retired philosophy professor living in the boondocks of Manitoba, Canada, with his Filipina wife. He enjoys reading the news and writing articles. Politically Ken is on the far left of the political spectrum on many issues.
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