On March 10th the new Governor of Central Bank of Libya (CBL), Abdul Hafeez El Zleetni called a meeting for all Libyan Banks’ General Managers to inform them that the liquidity situation is worsening – the shortage included Libyan Dinars and foreign currencies in Central Bank of Libya safes in Tripoli. Surely this was already apparent as local banks staff stood long hours at CBL’s doors to obtain cash for their branches. The shortage was created when Qaddafi decided to withdraw all foreign currencies as well as large amounts of Libyan Dinars and transfer it to Bab Al Azizyia and Sabha.
CBL had to revert to old currency bills which was scheduled to be decommissioned in January but was put on hold totaling 1.7 billion LYD. This was introduced to the market two and half weeks ago and will start to run out by end of this week due to serious demand inside the country for liquidity by local banks. The seizure of two freshly printed Libyan Dinars shipments in Europe did not favor the Libyan government; these shipments were supposed to help CBL deal with the liquidity situation. UN Sanctions and US Treasury department has frozen most of Libyan banks including CBL worsen the situation. Local banks have billions in obligations toward corresponding banks and beneficiaries – these obligations caused some serious exposures and implications for the local banks.
Several attacks have taken place on some of the local banks’ branches outside Tripoli by outraged customers demanding their deposits; however, local banks are not able to meet the demand. Banks are being forced by CBL to remain open regardless of the situation or face serious penalties.
Another situation is the Libyan Gold which was being held by CBL in Tripoli – it also had been transferred to Sabha. Gaddafi has about 145 tonnes of gold at a current market value of 6.5 billion US dollars. Gaddafi is planning to transport the gold to Africa black market and liquidate it to obtain foreign currency.
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