The Central Bank of Liberia (CBL) is poised to roll out a new savings program that aims at teaching Liberians, especially the less privileged, how to do smart savings for the future.
Referred to as the CBL's Bills and Notes (saving program), this new innovative initiative will allow individuals to set and lock a target, make deposits towards achieving that target over a specific period of time while earning a high interest.
Commenting on the program Tuesday, September 11, on Truth FM morning talk show, Jay G. Brown, CBL's Deputy Director for Regulation and Supervision, said it will give citizens an opportunity to determine their savings goals.
Brown made these statements on Tuesday, September 11, when he appeared on the Truth FM popular radio talk show the (TBS).
"This program is for you to plan your dream investment like buy a piece of land, plan for your children school fees or even establishing a business for yourself," he said.
Mr. Brown further explained that all the instruments that are below one year are termed as Bills and those that are above one year in terms of their maturity is term as Notes.
The program, according to him is an opportunity for an individual to save or invest their money, "so the minimum opening balance is set at L$10,000, giving room for a wide scope of Liberians."
He said the customers will be guaranteed by the CBL a real return or real interest on their investments, noting that, for investments up to six months, customers "will be guaranteed five percent return or interest. That means, for example, L$100 will give you L$105."
In addition to the rate of five percent interest for six months of savings, Mr. Brown said interest rate for one year's savings is seven percent, while rate for two years will be nine percent. According to him, Bills is an instrument that last for six months and up to one year.
Brown also said that these investments can be made at any commercial bank the customer trusts and forms will be available. However, investors that do not want to go through various commercial banks could walk directly to the CBL and purchase said instruments.
"We encourage people to use the commercial banks because the relationship you build with them will have longer term benefits. For instance, once you have that record in terms of dealing with commercial banks, tomorrow, if you want other services or products such as a loan, it will be easy for you, so we encourage people to make use of the this savings program."
In terms of the investment, the CBL's Deputy Director for Regulation and Supervision said there will be electronic entry, "so if you deposit L$10,000, if it is for six months your particulars will be logged into the system. You will be issued a receipt that will indicate your name and other particulars, the maturity and the interest."
Brown said one of the key features that are associated with the CBL's Bills and Notes has to do with indexation.
"What does indexation mean? There are times you see movement in the exchange rate, for example, the exchange rate will move from L$100 to US$1, to L$150; so you are worried that if your L$10,000 today can give US$100, tomorrow's if the rate goes to L$150 that L$10,000 will no longer be able to give you US$100," Brown said.
For his part, CBL Director for Financial Markets, Armaso Bawn, also said that the program is mainly intended to teach Liberian people how to save for the future. He added that the program is not for business purposes but just for the rainy days.
Mr. Bawn said what indexation does is that a guarantees you as an individual that at the time of maturity or redemption of the Bills, the L$10,000 that was equivalent to US$100, the local currency that will be received from the CBL, will be the same amount and will not be affected by the deprecation in the local currency.
David A. Yates