Economists would say panic and speculation are among the forces that drive the market and determine economic activities, whether good or bad. This is unfolding right now in Liberia with the issue of old and new bank notes, which has caused ordinary citizens to reject one for the other, though both are legal tenders.
The situation is annoying and frustrating. It has often sparked confusion between sellers and buyers in the market, often denying the latter the opportunity to get the commodity they want if they don't have the new Liberian bank notes printed between 2021 and 2022. However, sellers in the market are not to be blamed for this panic and confusion.
This is happening because the Central Bank of Liberia has publicized March 31, 2024, as the deadline for withdrawing the old banknotes in denominations of 20, 50, 100, and 500 from the market. For obvious reasons, panic or speculation would push people away from something whose lifespan is on the verge of ending with a deadline. They are bent on getting rid of it as fast as possible before this deadline expires, and the currency becomes useless.
After putting the cart before the house, which has left the public in panic, the authorities at the CBL now want to rearrange and damage control by putting the cart behind the horse, which is where it belongs and should have been from the initial stage.
It took Executive Governor J. Aloysius Tarlue himself to tell reporters recently that the old Liberian bank notes being withdrawn from circulation are still valid and should be accepted as medium of exchange even beyond the March 31, 2024 deadline.
The Governor stressed that the old banknotes remain valid, and the public's continuous refusal will hinder business transactions in the market--which is happening right now!
We believe this could have been avoided if the Bank had not set the deadline like breaking the day and caused panic, which is an enemy of any good economy. Panic turns an economy upside down and sends people running helter-skelter, acting against their will.
We are sure this is not the kind of outcome the CBL envisaged when it proclaimed withdrawing old bank notes from circulation. Still, the message sends the wrong impression that this legal tender has abruptly become illegal, so no one wants to accept it.
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It is time that policymakers design public messages with the public being reminded how they would react to avoid unintended outcomes and maintain stability, especially on an issue that has to do with money, which has fluid value.
The CBL and Executive Governor Tarlue would save themselves from such embarrassment if they considered how messages intended for the public would be received or responded to before releasing them. We believe this is always the professional thing to do.
