AN ACT TO AUTHORIZE THE ESTABLISHMENT OF THE CENTRAL BANK OF LIBERIA

APPROVED MARCH 18, 1999

PUBLISHED BY AUTHORITY
GOVERNMENT PRINTING OFFICE
MINISTRY OF FOREIGN AFFAIRS
MONROVIA, LIBERIA
OCTOBER 20, 1999

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AN ACT TO AUTHORIZE THE ESTABLISHMENT OF THE CENTRAL BANK OF LIBERIA

It is enacted by the Senate and House of Representatives of the Republic of Liberia in Legislature Assembled:

Section 1. An Act to Authorize the Establishment of the National Bank of Liberia, and all Acts amendatory thereto, are hereby repealed, and An Act to Authorize the Establishment of the Central Bank of Liberia is substituted therefor.

Section 2. Section 71.5 and 71.6 of Chapter 71, Title 36, of the Liberian Code of Laws Revised are hereby repealed.

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Part I. Preliminary

1. Preliminary
2. Definitions

Part II. Establishment of the Central Bank of Liberia

3. (1-3) Establishment of the Central Bank of Liberia
4. Functions of the Central Bank of Liberia
5. Powers of the Central Bank of Liberia
6. Head Office, Branches, Agents and Correspondents in Liberia and Abroad

Part III. Capital, Net Profits, and General Reserve

7. (102) Authorized and Paid-up Capital
8. Establishment of a General Reserve

Part IV. Administration and Management

9. Powers, Policy and General Administration of the Central Bank vested in the Board of Governors

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10-11 Appointment and Powers of Executive Governor and Deputy Governor
12 (1-3) Appointment of Governors, and Fees
13 (1-5) Resignation or Removal of Governors, Executive Governor, and Deputy Governor
14 Appointment of Successor in the Event of Death, Resignation or Removal from Office
15 (1-3) Meetings of Board of Governors
16 (1-2) Appointment of Officers
17 (104) Outside Interests of Governors and their Families
18 (104) Oath of Fidelity

Part V. Currency

19 (1-3) Monetary Unit of Liberia, Legal Tender
20 (1-4) Banknotes and Coins
21 (1-4) Printing of Banknotes and Minting of Coins
22 (1-2) Withdrawal of Banknotes and Coins
23 Lost, Stolen and Mutilated Banknotes and Coins
24 Counterfeiting of Banknotes or Coins
25 Penalty for Mutilating Currency

Part VI. External Reserve and Foreign Exchange Operations

26 (1-6) Maintenance of External Reserves by the Central Bank
27 Depository of all Official External Assets
28 Foreign Exchange Operations
29 Restriction on Dealing in Operations Set Out in Section 28

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30 (1-3) Dealing in Foreign Exchange

Part VII. Relations with Financial Institutions

31 Opening of Accounts for Financial Institutions
32 (1-2) Permission to Purchase, Sell, Discount and Re-discount Certain Types of Commercial Paper and to Grant Secured and Unsecured Advances
33 Fixing of Central Bank Rates for Discounts, Re-discounts and Advances
34 (1-5) Reserve Requirements for Financial Institutions
35 Interest Rate Determination
36 Provision of Information to the Public
37 Information and Data to be Furnished to the Central Bank
38 (1-3) Consultation with Financial Institutions and Establishment of Clearinghouse

Part VIII. Relations with the Government

39 (1-3) The Central Bank of Liberia to Act as Banker, Fiscal Agent and Advisor to Government
40 (1-2) The Central Bank of Liberia as Depository and Fiscal Agent for International Institutions
41 (1-5) The Central Bank of Liberia Credit to Government
42 Purchase, Holding and Sale of Notes, Bills, Securities or Other Evidence of Indebtedness
43 Consultation with Central Bank by Government

Part IX. Prohibited Operations of the Central Bank of Liberia

44 Prohibited Operations of the Central Bank of Liberia

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Part X. Financial Provisions and Reporting

45 Financial Year
46 (1-6) Financial Statements

Part XI. Miscellaneous Provisions

47 Application of Financial Institution and Administrative Procedure Acts
48 Promotion of Research and Training in Technical Subjects
49 (1-2) Transmittal of Annual Report and Statements
50 Annual Financial Report and Policy Statement
51 (1-4) Collection of Statistical Information
52 Advances to Officers and Employees
53 Exemption From Taxation
54 Liquidation
55 The Central Bank of Liberia Directives

PART XII. Repeal

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Part I

A. Preliminary

1. This Act shall be cited as the Central Bank of Liberia Act of 1999, and shall come into effect on the date it is published into hand-bills.

B. Definitions

2. In this Act, unless the context otherwise requires:

(a) “Central Bank” means the Central Bank of Liberia established under Section 3 of this Act;

(b) “banking business” means,

(i) the business of receiving funds from the public or from members thereof through the acceptance of voluntary money deposits payable upon demand or after a fixed period or after notice; or any similar operation through the frequent sale or placement of bonds, certificates, notes, or other securities from the Government of Liberia or from any foreign or international financial institution and the use of such funds either in whole or in part for loans or investments for the account and at the risk of the person doing such business; and

(ii) any other activity recognized by the Central Bank as customary banking practice which a financial institution engaged in the activities described in Section 2 (i) may additionally be authorized to do;

(c) “financial institution” means any person doing financial transactions consisting in the business of banking, credit, loan making, lending or rendering non-banking financial services: provided that, for the purpose of the Act, and unless the context otherwise requires, all officers and branches of a financial institution in Liberia shall be deemed to be one financial institution;

(d) “commercial bank” means any financial institution whose operations include the acceptance of deposits payable on demand and subject to transfer by check;

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(e) “credit institution” means any person whose operations involve lending without accepting from the general public deposits payable on demand or after a fixed period;

(f) “Board of Governors” means the Board of Governors of the Central Bank;

(g) “Governor” means any of the Governors constituting the Board of Governors,

(h) “Liberia” means the Republic of Liberia

(i) “Minister” means the Minister of Finance of Liberia

(j) “person” includes any company, partnership association or body of persons corporate or unincorporated;

(k) “non-bank financial institution” means any person whose financial transactions are in the form or non-bank financial services rendered without accepting from the general public deposits payable on demand or after a fixed period;

(l) “bank-financial institution” means any person doing business: Provided, that for the purpose of the Act, unless the context otherwise requires, all offices and branches of a financial institution in Liberia shall be deemed to be one financial institution;

(m) non-banking financial service means:

i. the business of the operation of thrift and loan associations;

ii. broker and dealer operations in securities and commodities;

iii. currency exchanging;

iv. check cashing;

v. redeeming and encashing money orders or dealing in any such other similar instruments;

vi. insurance underwriting business;

vii. loan or financing agency;

viii. money sender/receiver business;

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(n) “currency” means coins and banknotes issued and/or authorized to circulate as a medium of exchange.

(o) “officer” of the Central Bank means the Executive Governor, the Deputy Governor, a Manager, or an Assistant Manager of the Central Bank or other individual holding a position of trust, command or authority in the Central Bank.

(p) “Gazette” means the official publication of the Liberian Government evidencing acts of the State.

(q) “President” means the President of the Republic of Liberia.

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Part II. ESTABLISHMENT OF THE CENTRAL BANK

3. Establishment of the Central Bank:

(1) There is hereby established a body corporate to be known as the Central Bank of Liberia, (hereinafter referred to as the “Central Bank”) as the successor in business and interest to the National Bank of Liberia, to do business in accordance with the provisions of this Act.

(2) The Central Bank shall have perpetual succession and a common seal, and shall have general corporate powers to:

a. enter into contracts and issue and redeem obligations;

b. sue and be sued in its own name;

c. acquire, hold, and dispose of property, whether movable or immovable;

d. exercise all powers generally available to corporations as well as those powers specifically granted it by and under the provisions of this Act, and such incidental powers as shall be necessary to carry out the mandate so granted; and

e. stimulate economical growth through the use of monetary instruments.

(3) This principal objectives of the Central Bank shall be to achieve and maintain price stability in the Liberian economy. To this end, it shall devise and pursue policies designed to:

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a. preserve the purchasing power of the national currency;

b. promote internal and external equilibrium in the national economy;

c. encourage the mobilization of domestic and foreign savings and their efficient allocation for productive economic activities.

d. facilitate the emergence of financial and capital markets that are capable of responding to the needs of the national economy; and

e. foster monetary, credit and financial conditions conducive to orderly, balanced and sustained economic growth and development.

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4. Functions of the Central Bank

The Central Bank shall have functional independence, power and authority to:

(1) issue legal tender banknotes and coins;

(2) administer the currency laws and regulate the supply of money;

(3) provide credit to bank-financial institutions on a discretionary basis;

(4) act as fiscal agent for the Government

(5) administer the New Financial Institutions Act of 1999 and regulate banking activities;

(6) regulate bank and non-bank financial institutions, as well as non-bank financial services institutions;

(7) hold and manage the foreign exchange reserves of Liberia, including gold;

(8) advise the Government on financial and economic matters;

(9) conduct foreign exchange operations;

(10) play an active role in collaboration with bank-financial institutions in the creation and maintenance of efficient and safe mechanisms for payments, clearing and settlements to meet the needs of the financial markets, commerce, government agencies and the general public. The Central Bank shall execute this responsibility through permanent consultations with the

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bank-financial institutions and through implementation of the proper regulations and standards, as needed.

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5. Powers of the Central Bank

The powers of the Central Bank shall include, but not be limited to:

(1) supervision of bank-financial institutions, non-bank financial and authorized non-bank financial services dealers and brokers;

(2) management of aggregate credit in the economy by indirect means, by loan securitization, purchase and sale of securities, transactions in derivatives and foreign exchange and through the establishment of required reserves of commercial banks under its jurisdiction;

(3) formulation and implementation of monetary policies;

(4) determination of an appropriate foreign exchange regime, formulation and implementation of foreign exchange policy; and holding and managing foreign exchange; and

(5) handling external banking affairs of the Government.

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6. Head Office, Branches, Agents and Correspondents in Liberia and Abroad

The Central Bank shall have its Head Office in Monrovia, Liberia and may:

(1) establish branches within Liberia;

(2) appoint agents and correspondents within Liberia;

(3) with the approval of the Board of Governors, establish offices and appoint agents and correspondents abroad.

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PART III. CAPITAL, NET PROFITS, AND GENERAL RESERVE

7. Authorized and Paid-up Capital

(1) Without prejudice to the provision in Section 46(4), the minimum authorized capital of the Central Bank shall be L$400,000,000 Liberian dollars and may be increased by such amounts as may be proposed by the Board of Governors. There shall be a

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paid-up capital of L$100,000,000 by the Government upon the establishment of the Central Bank and further amounts in non-negotiable interest-bearing securities issued by the Government as may be proposed by the Board of Governors. All the paid-up capital shall be subscribed to and held exclusively by the Government and shall not be transferable or subject to encumbrance. No reduction of capital shall be effected except by an amendment to this Act. The balance of the authorized capital of L$300,000,000 shall be paid from Government budgetary appropriations at such time as the Board of Governors, in consultation with the Minister, may require. Liabilities of the Government shall pay when due on the outstanding obligations.

(2) The Minister, in consultation with the Board of Governors, shall cause to be transferred to the ownership of the Central Bank negotiable interest-bearing securities issued by the Government from time to time for such amounts as may be required for the purpose of reserving the paid-up capital from impairment as provided in Section 46 hereof.

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8. Establishment of a General Reserve

The Central Bank shall establish and maintain a General Reserve Fund to which shall be allocated at the end of each financial year of the Central Bank an amount to be determined pursuant to provisions in Section 46.

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PART IV. ADMINISTRATION AND MANAGEMENT

9. Powers, Policy and General Administration of the Central Bank vested in the Board of Governors:

The powers of the Central Bank shall be vested in a Board of Governors who shall be responsible for formulation and implementation of policy. The Board of Governors shall consist of five (5) Governors, to be appointed as hereinafter set forth, and shall have power to make, alter or repeal by-laws, regulations and orders for the purpose of giving effect to the provisions of the Act.

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10. Appointment and Powers of Executive Governors and Deputy Governor

(1) The management of the Central Bank shall be conducted by an Executive Governor who shall be Chairman of the Board of Governors of the Central Bank, and a Deputy Governors who shall serve as the principal assistant to the Executive Governor. The Executive Governor and the Deputy Governor shall be appointed by the President for a term of five (5) years each from among individuals of standing or experience in financial and economic matters, subject to confirmation by the Liberian Senate, on such terms and conditions as may be specified by the Board of Governors. The Executive Governor and the Deputy Governor shall be eligible for reappointment once.

(2) The Executive Governor shall:

(a) serve as Chief Executive Officer of the Central Bank, to be responsible to the Board of Governors for the implementation of its policy and to be in charge of the day-to-day management of the Central Bank;

(b) have powers to act, contract and sign instruments and documents, for and on behalf of the Central Bank. He may, pursuant to resolution of the Board of Governors, delegate such powers to other officers.

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11. Responsibilities of Executive Governor and Deputy Governors

(1) During the absence or disability of the Executive Governor or during any vacancy in the office of the Executive Governor, the Deputy Governor shall exercise the powers and duties of that office, except as Chairman of the Board of Governors. The Board of Governors shall elect a chairman for any meeting in which the Executive Governor and Chairman of the Board of Governors is absent. The Board of Governors shall make provision in the by-laws for the simultaneous absence or disability of the Executive Governor and the Deputy Governor.

(2) The Executive Governor and the Deputy Governor shall devote the whole of their professional time to the service of the Central Bank and while holding office, shall not engage in any business, profession, or employment, whether remunerated or not; provided that they may:

(a) act as members of any board of commissions appointed by the Government;

(b) become governors, alternate governors, directors, or members of any organization by whatsoever name called, of any international bank or international monetary authority, established under any agreement or convention to which the Government shall have adhered or given support or approval;

(c) become members of the board of any corporation organized by the Government for the purpose of insuring deposits in financial institutions.

(3) The Executive Governor and the Deputy Governor shall received from the Central Bank salaries and other compensations commensurate with their positions and duties; they shall not receive any salary or contribution, or supplementation thereof from any source other than the Central Bank; provided, that this restriction shall not bar from receiving remuneration from any assignment pursuant to 2 (a), (b) and (c) of Section 11.

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12. Appointment of Governors, and Fees

(1) The four Governors other than the Executive Governor shall be non-executive Governors and shall be persons in good standing and of unimpeachable character from the business and academic communities with experience and expertise in business, banking, finance, economics and management.

(2) Each of the four Governors shall be appointed by the President on a staggered-term basis, subject to confirmation by the Liberian Senate, for terms as follows:

(a) One (1) Governor shall be appointed for an initial term of four (4) years.

(b) One (1) Governor shall be appointed for an initial term of three (3) years.

(c) One (1) Governor shall be appointed for an initial term of two (2) years.

(d) One (1) Governor shall be appointed for an initial term of one (1) years.

Thereafter, all subsequent appointments shall be for a fixed period of five (5) years. Governors so appointed shall be eligible for re-appointment once.

(3) Fees for members of the Board of Governors shall be determined in accordance with objective criteria and shall be comparable to board fees paid by central banks in the West African sub-region.

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13. Resignation or Removal of Governors, Executive Governors, and Deputy Governor

(1) No person shall be appointed or shall remain Governor, Executive Governor, or Deputy Governor of the Central Bank who is:

(a) a director, an officer, an employee of any financial institution within Liberia and subject to the regulatory jurisdiction of the Central Bank; or

(b) a salaried government employee, except a teacher or professor in a university.

(2) The Executive Governor, Deputy Governor, or any other Governor may resign his office on giving notice in writing to the President.

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(3) A member of the Board of Governors can be removed from office only upon a bill of impeachment by the House of Representatives, upon a finding by a majority of the Board of Governors and the recommendation of the President, for any of the following reasons:

(a) Gross breach of duty;

(b) Misconduct in office;

(c) Conviction of a felony;

(d) Being declared bankrupt; and

(e) Violation of paragraphs (a) and/or (b) of sub-section 1 of Section 13.

(4) The President may, however, remove a Governor upon determination by a competent medical authority that he is medically unfit to execute his duties, or is permanently incapacitated.

(5) The Deputy Governor may be removed from office by the President or cause, upon the recommendation of the Board of Governors.

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14. Appointment of Successor in the Event of Death, Resignation or Removal from Office.

If a member of the Board of Governors dies, or resigns or is otherwise removed from office before the expiry of the term for which he has been appointed, another person shall be appointed in this place, within two weeks, to complete the unexpired period in the manner specified in Section 10(1) and 12(2).

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15. Meeting of Board of Governors

(1) The Board of Governors shall meet as often as the business of the Central Bank may require but not less frequently than once every three months. Pursuant to its by-laws, the Board of Governors may provide for regular meetings for which no notice shall be necessary, and special meetings to be convened at the written request of the Executive Governor or any other Governors, for which adequate notice shall be required.

(2) Decision shall be adopted by a simple majority of the votes of the members present and, in the event of an equality of votes, the Chairman shall have a casting vote. A quorum of the Board of Governors shall consist of three Governors, but less than a quorum may adjourn from time to time until a quorum is in attendance.

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16. Appointment of Officers

(1) All appointments of officers of the Central Bank shall be only to positions created by decisions of the Board of Governors and on such terms and conditions as shall be prescribed by the Board of Governors.

(2) No salary, fees, wage, and other remunerations, or allowance paid by the Central Bank shall be computed by reference to the net or other profits of the Central Bank.

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17. Outside Interests of Governors and their Families

(1) The Governors shall not be regarded or act as delegates on the board of any commercial, financial, agricultural, industrial, or other business interest with which they or members of their families may at any time directly or indirectly be interested and shall refrain from voting on any matter related thereto which becomes the subject of action by the Board of Governors; provided that such an interest, if so disclosed, shall not disqualify the interested party for the purpose of constituting a quorum.

(2) The Governors shall not be regarded as act as delegates on the board of any commercial financial, agricultural, industrial, or other business interest or receive or accept directions therefrom in respect of duties to be performed under this Act.

(3) The disclosure referred to in the preceding subsection shall be made at the commencement of discussions of the Board of Governors of matters in which Governors may have interests.

(4) Neither the Governors nor any officers or employees of the Central Bank shall receive any gift for themselves or person with whom they have family, business, or financial connections if the acceptance thereof would result, or give the appearance of resulting in, the diminishment of their impartial devotion to their duties under this Act.

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18. Oath of Fidelity:

(1) Every Governor, officer, employee or agent of the Central Bank shall take an oath of fidelity and secrecy in the form prescribed by the by-laws.

(2) No person who serves or has served a member of the Board of Governors or staff of the Central Bank, or as an auditor, or agent of the Central Bank shall, in a manner unauthorized by law:

(i) Permit access to, disclose or publicize non-public material information which he has obtained in the performance of his duties at the Central Bank;

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(ii) use such information, or allow such information to be used, for personal gain.

(3) Persons enumerated in Sub-section 18 (2) may disclose non-public material information outside the Central Bank, in accordance with procedures established by the Central Bank, but only if:

(i) in accordance with the expressed consent of the person to whom the information relates;

(ii) in performance of a duty to the public to make disclosure, inclusion to aid law enforcement and on the order of a court of competent jurisdiction or other person of competent authority;

(iii) to the external auditors of the Central Bank;

(iv) to foreign financial institutions supervisory authorities; or

(v) the interest of the Central Bank itself in legal proceedings requiring disclosure.

(4) Whoever, being a Governor or officer, or employee of the Central Bank discloses, or makes known in any manner or to any extent not authorized by law any information coming to him in the course of his employment or official duties or by reason of any examination or investigating made by, or return, report or record made to or filed with the Central Bank or such person, which information concerns the operations, or the identity, amount or source of any income profits, losses or expenditures of any person; or permits such information to be seen or examined by any person except as provided by law, is guilty of an offense and shall be liable to a fine not less than Two Hundred Thousand Liberia Dollars (L$200,000) and not more than Two Hundred Fifty Thousand Liberia Dollars (L$250,000) or imprisonment imposed for a term not exceeding twelve months or to both fine and imprisonment.

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PART V. CURRENCY

19. Monetary Unit of Liberia, Legal Tender

(1) The monetary unit of Liberia shall be the Liberian Dollar, divided into one hundred cents. The Liberian Dollar shall be the currency of Liberia and legal tender. Prices for all transactions in Liberia shall be indicated in Liberian Dollars and Cents. The Liberian Dollar shall be prefixed by the sign “L$”, and Liberian Cents shall be suffixed by the sign “¢”. The Liberian Dollar shall be the currency for all accounting, financial reporting, and official purposes in Liberia.

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(2) Currency of the United States of America shall be legal tender in Liberia. For the discharge of public and private obligations, legal tender shall include banknotes or coins issued by the National Bank of Liberia or the Central Bank, and other currencies, at prevailing market rates, the circulation of which the National Bank of Liberia or the Central Bank has authorized or which the Central Bank may hereafter authorize. Legal tender shall also include, on the date that this Act takes effect, Liberian coins authorized to be minted in accordance with Section 1173 of Title 35 of the Liberian Code of Law of 1956.

(3) Currencies issued by the monetary authorities of other countries can freely circulate in Liberia, and such currencies can be freely exchanged with the Liberian Dollar at prevailing market rates. Bank accounts can be maintained in such currencies with bank-financing institutions in Liberia.

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20. Banknotes and Coins

(1) The Central Bank shall have the sole right to issue banknotes and coins in Liberia, and is hereby so authorized.

(2) The Central Bank shall, however, be deemed to have issued Liberian coins authorized to be minted in accordance with Section 1173 of Title 35 of the Liberian Code of Laws of 1956 and transferred by the Government to the National Bank of Liberia for circulation, with an equivalent amount of non-negotiable, non-interest-bearing securities having been issued by the Government for the purpose of covering any liabilities now assumed by the Central Bank for coins issued and outstanding as of that date, pursuant to the National Bank Act.

(3) No person other than the Central Bank shall issue coins, banknotes, or any documents or tokens payable to bearer on demand having the appearance of or purporting to be Liberian currency without the prior approval of the Central Bank, neither shall any person other than the Central Bank issue commemorative coins of Liberia without the approval of the Central Bank. Such approval shall be deemed granted herein in respect of any currency issued prior to the effective date of this Act by the National Bank of Liberia and the Government, except where previously specifically recalled.

(4) Any person contravening the provision of Section 20(3) is guilty of an offence and shall be liable to pay a fine of not than ten times the money gain he might have made, or One Hundred Thousand (L$100,000) Liberian Dollars, whichever is greater, or be imposed for a term of up to four years or to both such fine and imprisonment. Such coins or banknotes so issued shall be confiscated.

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21. Printing of Banknotes and Minting of Coins

(1) The Central Bank shall arrange for the printing of banknotes and the minting of coins and for all matters relating thereto, including but not limited to, the security and safe-keeping of unissued banknotes or coins and the custody and destruction, as may be necessary, of dies and retired banknotes or coins.

(2) Banknotes or coins issued by the Central Bank shall be in such denominations, composition, form and design as shall be approved by the President upon the recommendation of the Board of Governors. The characteristics of banknotes and coins issued by the Central Bank shall be published in the Gazette.

(3) The Central Bank shall directly administer the currency reserve inventory, develop and implement plans, and ensure the regular supply of banknotes and coins, in order to meet the currency requirements of the economy.

(4) The aggregate amount of circulating banknotes and coins shall be noted in the accounts of the Central Bank as a liability of the Central Bank; such liability shall not include banknotes and coins in the currency reserve inventory.

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22. Withdrawal of Banknotes and Coins

(1) The Central Bank shall have power, on giving notice in the Gazette and in at least one newspaper of general circulation in Liberia, to call in, for the purpose of withdrawing from circulation, any banknotes or coins issued by the Central Bank or the circulation of which it or the National Bank of Liberia has otherwise authorized, on payment of the face value thereof. Any banknotes or coins so recalled shall, in accordance with the terms of the notice, cease to be legal tender. Provided, that the holders of such banknotes or coins shall be entitled, at any time within in the period designated in the notice, to claim payment from the Central Bank in accordance with such regulations as the central bank may issue.

(2) The Central Bank may decline to exchange banknotes or coins if their designs are illegible, misshaped or perforated. Such banknotes or coins shall be withdrawn and destroyed without indemnity to the owner.

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23. Lost, Stolen and Mutilated Banknotes and Coins

The conditions under which mutilated or otherwise damaged banknotes or coins may be exchanged or refunded at partial or face value shall be determined by regulations issued by the Central Bank.

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24. Counterfeiting of Banknotes or Coins

The Central Bank shall assist in the enforcement of any law in Liberia relating to the counterfeiting of banknotes or coins; certification by a duly authorized officer of the Central Bank that an item in question is or is not genuine shall be prima facie evidence of the fact in any legal proceeding in Liberia.

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25. Penalty for Mutilating Currency

Any person who, without lawful authority or excuse, mutilates, or otherwise defaces, banknotes or coins, whether by cutting, tearing, perforating, writing, printing, drawing or stamping thereon, or by attaching or affixing thereto anything in the nature of an advertisement or other notice, is guilty of an offense and shall be liable to pay a fine not exceeding Twenty Five Thousand (L$25,000) Liberian Dollars or imprisonment of up to two years, or both such fine and such imprisonment.

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PART VI. EXTERNAL RESERVE AND FOREIGN EXCHANGE OPERATIONS

26. Maintenance of External Reserves by the Central Bank

(1) The Central Bank shall maintain external reserves at a level economically appropriate for the monetary system of Liberia in all or any of the following forms and on such terms and conditions as the Board of Governors may prescribe:

(a) gold;

(b) foreign exchange in the form of currency or Central Bank balances held abroad;

(c) any internationally recognized reserve assets, including:

(i) the reserve position of Liberia in the International Monetary Fund; and

(ii) the holding of any Special Drawing Rights issued by the International Monetary Fund;

(d) bills of exchange and promissory notes dominated in foreign currency and payable at any place outside Liberia; and

(e) debt obligations created in one of the two highest categories by two internationally recognized credit rating agencies.

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(2) Foreign Exchange Regime and Exchange Rate Policy

(a) The foreign exchange requirements of Liberia shall be determined by the Central Bank and shall be consistent with the obligations of any international treaty to which Liberia is party or to which it has adhered.

(b) The exchange rate policy of Liberia shall be formulated, adopted and executed by the Central Bank.

(c) The rate of exchange of the Liberian dollar against other convertible currencies shall be determined freely in the market.

(3) Foreign Exchange Regulation

The Central Bank shall have the power to:

(a) issue rules and regulations governing foreign exchange transactions of individuals, non-financial enterprises, financial institutions, and Government agencies and instrumentalities;

(b) supervise and regulate foreign exchange dealers including bank-financial institutions;

(c) set limits on foreign exchange positions of foreign exchange dealers, including bank-financial institutions;

(d) establish the method of determining the value of the Liberian Dollar in relation to other currencies.

(4) Foreign Exchange Controls

(a) All current and capital account transactions shall be free of control.

(b) Notwithstanding the above, where the Central Bank finds that Liberia has experienced a severe deterioration in its balance of payments that necessitates the imposition of exchange controls, the Central Bank may issue regulations restricting certain transactions for a period not exceeding six months.

(5) Reporting of Foreign Exchange Transactions

Licensed foreign exchange dealers, including bank-financial institutions, may be required by the Central Bank to report periodically to the Central Bank on their operations on a currency-by-currency basis; the Central Bank shall prescribe the reporting forms and supporting documents that must be submitted.