To buy his groceries, Mohammad Al-Qabaily signs a small piece of paper, a type of subsititute bank note, equivalent to 20 Libyan Dinars, payable to grocer Abdulla Al-Maqreef. In Ejdabia (160 Km west of Benghazi), this is how people conduct their daily business, since the banks lack liquidity.

Not only has Al-Maqreef adopted this way of conducting business, these notes can be found all around the city. Cigarettes, construction material and even workers and craftsmen are paid with these slips.

To buy his groceries, Mohammad Al-Qabaily signs a small piece of paper, a type of subsititute bank note, equivalent to 20 Libyan Dinars, payable to grocer Abdulla Al-Maqreef. In Ejdabia (160 Km west of Benghazi), this is how people conduct their daily business, since the banks lack liquidity.

Not only has Al-Maqreef adopted this way of conducting business, these notes can be found all around the city. Cigarettes, construction material and even workers and craftsmen are paid with these slips.

Mohammad Al-Qabaily, 36, told Correspondents that he has been buying his groceries with these notes for five months now. He added, with a smile, that he has even forgotten what the green Libyan bills look like. Now he folds these notes and keeps them in his pockets the way he used to keep money.

Al-Qabaily frequents his bank in the city center more than four times per week to transfer the money entered his bank account numerically, to the accounts of some merchants. In return, he receives other notes written in the bank teller’s handwriting, which is sometimes illegible due to of the bank teller’s exhaustion due to the high demand. However, these notes will later be used to pay the grocer, the pharmacist, and even the barber.

Grocer Abdullah Al-Maqreef, however, is not totally content with this way of payment. “There is no other way,” he said, “but it is better than having unsold goods.” Yet he also concedes that the current solution is unsustainable.

Crowded banks

Bank notes for goods – this new way of trade has revived the banks’ halls and offices in the city. Hundreds of citizens flock there every morning, even before the banks open their doors, to stand in line in front of the bank windows to sort out their stacks of notes.

Saad Al-Eida, governor of the Republic Bank in Ejdabia says that in order to make their payments this way, citizens must have money in their accounts and then must write on the note the name and account number of the beneficiary. Based on that, the transfer will made between the accounts for which the payer receives a receipt that he later shows to the beneficiary. Al-Eida acknowledges that this is a very bureaucratic and frustrating, but he believes it to be the only way possible under the current conditions.

Al-Eida added that confusion is unavoidable, especially when merchants are at the bank receiving the receipts for their money. Since many people may write notes to the same merchant, mostly those who have large grocery stores, the bank teller calls on that merchant by name for every receipt. “It is a primitive way,” says A-Eida.

Not all merchants

Although the bank slip way is common across the city, some merchants decided to stop dealing with it, saying that it does not produce profits. Ahamad Abdulhameed, a construction material trader told Correspondents that his store has suffered losses because of this payment system. Abduhameed says that he used to pay cash in order to buy goods from retailers and in return, he received scraps of paper, “What would I do with these scraps of paper?” he wondered.

Al-Maqreef however, says that this depends on the retailers themselves. Some retailers, he says, accept the bank transfer notes, which is why he was able to use them with his customers. In addition, many traders hang signs on their doors saying: “We accept bank slips” in order to attract customers and spare them the embarrassment of asking about it.

An organized way

Economy professor at Ejdabia University, Saleh Abdulrahman says that this method may encourage the central bank to continue its negligence in the problem of negative liquidity. Saleh deems the temporary solution “Illogical and has more disadvantages than benefits, and if there is no other way, the banks have to be more organized conducting it.”

The professor was referring to a plan put forth by the administration of  the Commerce and Development Bank, which on 10 August, called through its website on shopkeepers, merchants, hospitals, and even restaurant owners to visit the bank’s branches and subscribe to the “Pay me” service. The service provides traders with a machine connected to their bank accounts via internet that can make the transfer simply by entering the name of the costumer and his account number. However, the problem with this service – which has not yet been launched- is that the only people who can benefit from it are those who have accounts in the Commerce and Development Bank.

Al-Qabaily did not seem at all worried about the proximity of Al-Adha celebration, in which the prices of sheep soar. He knows that the sheep market brokers who sell the animals on the street side have joined the ranks of those who deal with the bank notes, and Mohammad has already put aside a bank note of 500 Dinars to buy the Adha sheep. “I do not care about the manner of paying as long as I can get what I need.”