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The Central Bank of Libya of the country’s eastern government has issued new 20- and 50- dinar banknotes.

The new 20- and 50- dinar banknote denominations were issued on 1 June 2016 and were reportedly printed in Russia, presumably by the Russian state banknote printers, Goznak.

The new notes are similar in design and size to the existing banknotes currently circulating within the country, but have different security features, watermark designs and serial number layout. 4 billion dinar banknotes have been printed with the signature of the eastern central bank Governor, Ali Al- Hibri.

Libya cash crisis

There are many local news reports that Libya is suffering from a cash crisis, mainly due to a reluctance by the Libyan public to deposit their cash. The country’s longstanding banking liquidity crisis has led to both businesses and members of the public hoarding their cash and refusing to use local banking services. It is thought, according to reports, that 24 billion banknotes are circulating in the country – twice the number of notes in circulation per person than in the United Kingdom by comparison.

De La Rue, the British banknote printer, has been a long term supplier of banknotes to the Libyan government in Tripoli. To help ease the cash crisis De La Rue reportedly sent 70 million banknotes to the country valued at US$50 million last month, and is in the process of delivering a further 1 billion banknotes before and after Ramadan.

Libya’s rival governments and central banks

The Central Bank of Libya, originally established in 1956, used to be under the control of the Gadaffi government until his death in 2011 during the Libyan Civil War. Since this time, there have been two competing government regimes and subsequently two competing branches of the Central Bank of Libya – the western Tripoli branch and the eastern Bayda branch.

The western Tripoli branch is run by the US backed Government of National Accord (GNA), while the Bayda branch is under the control of the Tobruk based House of Representatives.

With regards to the release of the new banknotes, initial reports stated that the western central bank rejected the new notes. The US Embassy made the following statement on their Facebook page:

“The United States has been formally advised by the Libyan Presidency Council (PC) in a letter dated May 23 that Mr. Ali El Hebri, claiming to act as the Governor of the Central Bank of Libya, concluded an agreement with an international firm to print and deliver a large quantity of Libyan dinar banknotes. The United States concurs with the Presidency Council’s view that such banknotes would be counterfeit and could undermine confidence in Libya’s currency and the CBL’s ability to manage monetary policy to enable economic recovery.”

However, there are now reports that the GNA has accepted the new banknotes and that both east and west central banks will jointly supervise the issuance of the new notes from 1 June 2016.