Liberia is a nation in West Africa that was a busy trading region for British, Portuguese, and Dutch merchants in the 17th century. European traders exchanged commodities with local traders as a form of payment. At the start of the 19th century, freed American and Caribbean slaves began to resettle in Liberia. The former slaves moved to Liberia due to the injustices suffered in America. The newly settled American-Liberians declared Liberia an independent state in July 1847. It was the first African country to attain independence. The American-Liberians also created Liberia’s first currency, the Liberian dollar, and linked it to the US dollar.
First Liberian Currency
The Liberian dollar was introduced as the country’s first currency upon its independence in 1847. It was equally valued to the US dollar at the time. The Liberian dollar came in the form of copper coins worth one and two cents. Liberia’s first bank notes were issued by the Treasury in 1857 in denominations of 1, 2, 3, 5, and 10 Liberian dollars, as well as 10 and 50 cent notes. Coins in denominations of 10, 25, and 50 cents were introduced in 1896.
British West African Pound
Liberia abandoned its dollar currency in 1907 and adopted the British West African pound. At the time, the West African pound was the currency circulating in most West African countries, including Nigeria, Gambia, and Sierra Leone. The British West African pound was pegged to the pound sterling. The currency came in the form of aluminum and nickel-plated coins. In 1918, newly created banknotes were issued. The coins and banknotes were produced and issued by the West African Currency Board.
Second Liberian Dollar
In 1935, Liberia stopped using the British West African pound in favor of the US dollar. Two years later, the Liberian Treasury released new Liberian dollar coins which were used concurrently with the US dollar. The currency went on to be used for many decades. After a violent coup and an assassination of the president in 1980, Liberia experienced political upheavals and a civil war that lasted until 2003. Due to the instability experienced in that period, the country’s economy greatly declined. As a result, the Liberian dollar significantly depreciated against the US dollar. In 2000, the newly established Central Bank of Liberia released new banknotes each bearing a former president’s portrait. Between 2013 and 2015, Liberia suffered again after the dreaded Ebola virus spread in the country killing more than 11,000 people. The outbreak of the disease dragged down the country’s economy and its currency.
Modern Liberian Currency
As a result of a massive decline in Liberia’s economy which started in 1980, the Liberian dollar significantly lost value. High rates of corruption in the country also led to its loss of value. Due to the continuous drop in the value of the currency, very few traders accepted it as a medium of exchange. People in Liberia prefer to use the US dollar as opposed to their national currency. The country lacks proper financial systems to exchange foreign currency. Traders exchange the Liberian dollar for the US dollar in the black market, which leads to a further decline in the value of the Liberian dollar.