Mrajaa Ghaith to Sada: “Banks Have Shifted from Credit Institutions to Mere Currency Sellers”

Former member of the Board of Directors of the Central Bank of Libya, Mrajaa Ghaith, said in an exclusive statement to our source that even if the Central Bank were to inject all of its reserves, the dollar would fall and then rise again a week later, because demand for the dollar is informal. “We have invisible demand. Some are willing to buy the dollar even at 50 dinars, among them smugglers, arms dealers, terrorists, human traffickers, and drug smugglers. They have no problem at all. Any dollar put on the market, they will take it at any price. The dollar problem in Libya is not linked only to the Libyan state, traders, or Libyan users. This is organized crime at a global level, not limited to Libya. If it were only the Libyan traders’ issue, the problem would have been solved. Therefore, these are not pressure measures, but monitoring measures on how the dollar is used, where does it go?”

Ghaith questioned what are referred to as “personal purposes,” asking whether Libyan citizens actually travel for tourism. He answered that very few do so; some travel for medical treatment. “Today, almost all Libyans have a personal-purpose card; once a child is born, a card is issued and then sold to black-market traders. This must end through a different approach. The approach we currently see as appropriate is to allow banks to provide cash dollars to a number of citizens who genuinely need them. Citizens cannot withdraw large amounts anyway; even globally the limit is around $4,000 or $5,000—this is not an issue. But today we have thousands of cards, each with $4,000, amounting to four million cards. Where does this money go? It is smuggled abroad. We all heard the story that happened in Turkey.”

He continued: “God willing, this chaos will end at this level, because these operations, according to international investigations, are reopened after 20 years, and banks are questioned about them after 30 years. I have reviewed files where investigations were reopened after thirty years due to suspicions of money laundering. This is not a matter of a day or a month.”

Ghaith explained that these practices are what led to the emergence of the black market. “The issue is economic, not security-related. Closing Al-Mushir market does not end anything, because the black market exists in WhatsApp rooms in Dubai or Istanbul. They trade prices every morning via their phones. The solution is economic, not security-based. You can stop small players dealing in thousands, but major traders dealing in millions are impossible to stop. The real market is not in Al-Mushir; it is in WhatsApp rooms.”

He added that the crisis is one of trust between depositors and banks, because banks no longer provide services that benefit them. “Small traders ask: why should we put our money in the bank when we cannot withdraw it and have to buy from the black market? This is a point the Central Bank must pay attention to. ‘Zero cash’ is a dream—we are still a cash-based society. People naturally prefer cash because it gives them reassurance when their money is in front of them. We hope to achieve a 50/50 balance between cash and banking services, and the entire role then falls on banks to attract customers. Attraction comes through improving services, offering benefits and incentives, and bearing part of the costs in the early years, as happened in Egypt.”

He continued: “I do not fully blame banks, because they went through a difficult phase and are no longer just banks; they became salary treasuries. Today, asking them to make a 180-degree turn and become like global banks is difficult. This transformation needs 10 to 15 years for proper banking culture to develop among people and for systems and services to evolve.”

The former member of the Central Bank of Libya’s Board, “Mrajaa Ghaith,” concluded his statement to Sada by saying: “Banks have shifted from institutions with a credit role to merely selling currency. Their services have become focused on letters of credit and personal allocations. We hope banks return to their true role.”