Libya Monetary transition from the dinar to the Libyan pound... Reflection on the exchange rate

The Libyan dinar falls to its lowest level and then rises slightly in the parallel markets (Black Market) against the dollar, with a marked slowdown in the growth of the Libyan national economy, which has become a weakness of the Libyan dinar.

The volatility of the value of the Libyan dinar fluctuated with the weakness of the Libyan dinar exchange rate against foreign currencies, especially the dollar because of the dinar peg to the dollar, which became the reference of the dollar to the dinar as a basis of commercial transactions rather than the strength of the value of the Libyan dinar.

The result is that, the slower growth of the Libyan economy has declined with the value of the dinar, and the decline in the dinar in value resulted in the decline in purchasing power, causing a drop in the exchange rate of the Libyan dinar.

The Libyan dinar has maintained the current level of 6.11 dinars per the one dollar, while reaching the level of 9.11 dinars per dollar in the past few months because of the deteriorating economic factors experienced by Libya political situation.

Libya has not achieved any economic growth as the data and statistics of the world reveals, but on the contrary, the Libyan economy has achieved a terrible decline of economic growth rates, which measured by GDP in recent years, years of decline and decline.

The political and security climate in Libya is affecting and indicates a negative fallback in private construction activity and public services expected of the Libyan citizens.

However, the governor of the Central Bank of Libya, did not accelerate the implementation of economic reform programs in Libya, pointing out, that the unstable political factor and sovereign division are preventing the implementation of the program of economic reforms in the country.

In order to develop a full conception of the economic issue in Libya, it was necessary to correct gradually and switch back to the former Libyan currency, which was traded in the Libyan national economy for many years.

It was called "Libyan Pound" that had all its symbolism and Arab - Islamic civilization,  and to rename Central Bank of Libya to Bank of Libya, as well as renaming of the word Banks of Exchanger to the word "Bank" to deal with Libyan currencies cash and metal.

New monetary conventions should be carried out in Libya, including the deletion of the last zero of the Libyan currency Dinar (0) in Libyan monetary units and denominations from the Libyan dinar equal to (1000) thousand “dirham” to one Libyan pound, equals to 100 hundred Libyan piasters.

This monetary reform may raise many questions, questions about the meaning and significance of this new Libyan monetary shift, and its impact on the exchange rate of the Libyan dinar against foreign currencies, especially the US dollar.

Libya is experiencing severe economic crises, a complete deterioration in the Libyan banking sector, a shortage of liquidity, financial inflation and a severe slowdown in economic growth, but also a significant decline in economic growth from Libya's gross national product, according to international reports and statistics.

The critical shift from the dinar to the Libyan pound is a crucial point between the past and current economy and the booming future economy, as the Libyan economic turning point, this shift signify a helping point in the pockets, portfolios, accounts, savings and investments of the Libyan citizen,

As Libyan governments seek to unify Libyan constitutional institutions, the option of a monetary shift from the dinar to the Libyan pound is the best options that will help to raise or lower the exchange rate of the Libyan national currency within the limits of global markets against foreign currencies in general.

In order to reduce the uncertainty facing the Libyan financial institutions from this Libyan logical shift, is to legally and fairly seek Libyan monetary transformation and to restructuring the Libyan economy from the previous laws.

 The new Libyan state laws, will provide opportunities for Libyan national economic development and prosperity.

Clarifications on this reform require the questioning of the complexity of Libyan social life before and after the Libyan revolution of February, which the Libyan Revolution of 2011 has removed the former regime of the Jamahiriya the State of the Masses.

 The new Libya is to acquire the parameters governing, the relations of production and distribution of financial and economics’ culture in the private sector with the cooperation of the Libyan state in the contemporary scientific method.

The subject of monetary transformation is very necessary, which is one of the normal procedures known among the countries of the civilized world, to force the country to get out of its crises.

Libyan state is to make the entry of Libya into the high national income, and also the middle and low income alike to rise according to Libyan economic growth.

Contribution to the Libyan monetary transition works to increase the confidence of citizens in the national currency, as it is an economic axiom that facilitates the factor of growth and development in Libyan society.

 To lead the country of Libya to the departure from being a central planed economy into second newly national economy between mixed between private and public sectors.

Reforms of the Libyan national economy is a proven need to control the movement of liquidity and raise the safety measures of Bleaching Money (Money Laundry) and exit from the illegal regime, the “Hidden Economic System” in the Libyan society, the process of "Bank Accounts" working on the entrances and exits Libyan cash funds from banks operating in Libya.

The economic considerations that distinguish the Libyan currency from the Libyan (coinage) metal units in the deletion of “zero” of the dirham and turn into Libyan metals coinage, which lies in the retention of the Libyan currency for a longer period of time.

 Libyan metal (coinage units) consist of the following: one penny (piaster), five pennies piaster, ten pennies piasters, one quarter pound, twenty five pennies piaster, and one half pound, fifty pennies piaster, and one pound hundred pennies piaster.

 The paper currency consists of the following: one Libyan pound, five pounds, ten pounds, twenty-five pounds, fifty pounds, one hundred pounds, one thousand pounds and ten thousand pounds, a new Libyan paper currency published in the circulation of the modern Libyan economy.

This development in the Libyan national economy works on the needs of consumers and traders alike, where additional forces are used to maintain the purchasing power of Libyan nationals in the private sector.

The actual real value of income, salaries and wages will remain the same without change, change or modification, from the transition period to the new era of free trade in the Libyan national economy.

The Libyan citizen's needs of this monetary reform for the exchange rate of the Libyan currency, thus leading to other reforms, usually will not lead in particular to the non-violation of the official exchange rate legally approved by the Central Bank of Libya.

Maintained exchange of rate by the Central Bank on the value of the Libyan currency up-to-date in the Libyan economy is an Upgrading and not reducing the exchange rate of the Libyan national currency.

Today, we are not working on moving stagnant water that has been going on for more than forty-two years during the Kingdom's reign, but we are discussing the interest of the Libyan nation economically and socially and away from the roar and resentment to the previous political regimes.

Libyan political systems stemmed from, the Libyan Kingdom regime to the regime of the Libyan Republic to the system of the Libyan Arab Jamahiriya the Sate of the Masses.

 The new Libyan monetary transformation is a new Libyan currency paper and metal (coinage) and a broad national consensus is a prerequisite to promote prosperity for the Libyan people as a whole and for the Libyan generations emerging afterwards.

By Professor Ramzi Halim Mavrakis