Banking System in Libya: Liquidity

Ahmed Rajab, General Manager of Jumhouria bank – the largest bank in Libya, discusses the liquidity issues in the banking system in Libya.

Rajab disagrees that the liquidity is the major issue for banks in Libya. Instead, he says: “There is no problem. We are a very liquid bank. We have 14 billion Libyan dinars just in promissory notes of the central bank. We are just getting 1% from the central bank and this money should be granted to the individual market at least to contribute to the building of the country for the future.”

The excess liquidity held by the central bank should be invested in the private sector to kick-start the economy. The major issue for Rajab is that current regulation does not allow for substantial easing of the liquidity.

“We need these changes to allow the banking sector to work freely with security. The money belongs to the people and we have to study properly where to invest the money. In particular, most of the money is short-term funding and some investments right now should be long-term funding. So we have to do our best,” he adds.