10 December 2012

Liberia: Rights Activist Challenges CBL Over Lack of Change Coins

There are reports of a threat to seek a writ of Mandamus against the Central Bank of Liberia (CBL) for its alleged failure to issue change coins since government put into circulation new banknotes in denominations of five, 10, 20, 50 and 100 dollars in 2000 to end a reign of two five-dollar banknotes ("JJ" and "Liberty") that created a monetary divide in trade and commerce amongst populations in Monrovia and other parts of the country .

The JJ Roberts banknotes had been printed exclusively in five-dollar bills, replacing the seven-corner five-dollar coins, minted in 1983 to stem capital flight and the emerging scarcity of US dollars that resulted from the pullout of multinational corporations due to Samuel Doe's military takeover in 1980.

During the heat of the civil war, Interim President Amos Sawyer brought the "Liberty" banknote into the picture in 1991 more so as a political tool than an economic imperative, according to local economists, who believed the move was intended to economically strangulate and coerce Charles Taylor's rebel movement to end the war.

But Taylor then reacted by declaring the "Liberty" banknotes as counterfeit and banned its circulation in his rebel-held territory, giving rise to a dual banknote dilemma that serious affected internal trade until March 2000 when the generation of banknotes in five, 10, 20, 50 and 100-dollar denominations were put into circulation, but without change coins.

As the notes into circulation, a central bank source then said a similar introduction of change coins would follow between June and July 2000, although the bank assumes that some 35 million dollars in coins in circulation could be hoarded for being neutral "between the controversial 'JJ' and 'Liberty' banknotes.

Controversial human rights activist, Mr. Melvin Page, who is threatening a writ of mandamus against the CBL and the government by association, says the failure of local banks to pay out change coins to customers is causing the public huge financial losses and hardship in daily transactions.

He mentions marketplaces where any item that sells for less than five dollars is usually adjusted upward to five dollars or to cost 2 for 15 dollars, 3 for 20 dollars, etc.

Speculating that CBL is withholding change coins for reasons best known to bank authorities, Mr. Page says, without change coins, thousands of civil servants and other government employees have continued to experience huge losses to commercial banks which do not fully pay the face value of their checks ending in dollars less than five and cents.

He sees no reason for banks' failure to pay the full value of checks they cash only because the face value ends in less than five and cents, and promised to shortly seek a writ of mandamus to challenge CBL on the matter.

He described the loss suffered by government employees on hundreds of thousands of checks cashed in various commercial banks as stealing from customs, and laid the blame at the doorsteps of CBL for its failure to provide change coins.

Shortly before the new money went into circulation, one economist expressed skepticism that the move may affect prices in the absence of sufficient change coins, but the central bank then said prices will be determined by "the dynamics of the market forces". Despite how shortchanging customers at commercial banks have been

acquiesced by thousands of people engaged in banking and other transactions at marketplaces where food items are sold, it is worthy to hail the rare but important challenge by Mr. Page to protect public interest. Other rights advocates must be encouraged to engage in similar selfless activities.

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