TRIPOLI Jan 13 Libya's central bank has
started withdrawing old currency in an apparent attempt to
restore liquidity into the country's banking system after it
found that the vast majority of funds are being kept outside
"One of the biggest implications in the economy is the
increase of the percentage of money in the market outside the
banks which is in excess of 15 billion dinars ($12 billion) or
96 per cent of available money," Saddeq Omar Elkaber, governor
of the central bank told reporters on Friday.
"The bank has started printing a new Libyan currency to
replace exist notes," he added.
ElKaber said that the central bank has set a timeline for
withdrawing the old currency starting with the fifty dinar note,
the highest value banknote.
"The bank is asking the Libyan banks to accept or facilitate
the handover by accepting the fifty dinar banknotes," he said.
This measure is an indication that the Central Bank wants to
return confidence to Libya's banking system, which suffered
severely during the civil war that ended ex-leader Muammar
Gaddafi's 42-year rule.
RUSHING TO THE BANKS
The bank's deputy governor, Ali Mohammed Salem, told Reuters
last month that the central bank's major concern was to restore
liquidity in the Libyan banking system, which was depleted of
its dinar reserves when Gaddafi's entourage seized 3-4 billion
dinars ($2.4-$3.2 billion) from the central bank. They also
seized 2.3 billion dinars worth of gold, he said.
The problem was made worse when people rushed to the banks
during the war, withdrawing 7 billion dinars, Salem said.
Incidentally, this meant Libya's large cash reserves kept
the dinar largely stable last year.
Salem said the central bank was working on injecting cash
into local banks by printing 6 billion dinars, adding that the
first batch of 300 million dinars was delivered on Dec. 24.
Banks are already accepting the fifty dinar bill - which
some Libyans refuse to use as it has an image of Gaddafi printed
on it - and the last date for handing in the bill is March 15th
After that date Libyan banks have a week to deposit these
bills into their central bank accounts.
Govenor ElKaber said other notes will be withdrawn after
(editing by Ron Askew)