The dollar is the official currency of the Republic of Liberia. However, the U.S. dollar is used alongside the Liberian dollar as an unofficial, but more stable, currency. As all modern dollar currencies, the Liberian dollar is decimalised and comprised of 100 cents. The current Liberian dollar was introduced in 1982 and is currently issued by the Central Bank of Liberia.
The first Liberian dollar was introduced in 1847. It was pegged on par to the U.S. dollar until 1907 when the dollar was replaced by the British West African pound. The British West African pound was pegged to the British pound sterling. In 1935, this currency was replaced by the U.S. dollar as the official currency of the country. In 1982, the Liberian dollar was reintroduced as the official currency, but the U.S. dollar continues to be used in transactions large and small. When the civil war erupted in 1990, new banknotes were issued to replace notes looted from Liberian banks. This effectively created two separate Liberian currencies with the old notes being used in separatist areas and the new notes used in government-held areas.
The Central Bank of Liberia was established in 1999, and it began operating in 2000. The new central bank replaced the National Bank of Liberia as the currency issuing authority of the country. The objective of the Central Bank of Liberia is to maintain price stability and purchasing power of the dollar, promote the nation’s economy and facilitate both financial and capital markets through the manipulation of credit and financial conditions.
Liberia is known for being a poor, war-torn country with one of the highest unemployment rates in the world. It is estimated that the formal unemployment rate is as high as 85 percent. The Liberian GDP is only A$889 million, and the per capita GDP of just over $206 is the third-lowest worldwide. During the Liberian civil war, which ended in 2004, the GDP of the country dropped by over 90 percent. When the war ended in 2003, the economy began a slow recovery ranging from 4.6 percent to 9.4 percent annually. Much of the growth in the economy is due to increased timber, rubber and iron ore exports. The economy of Liberia is often hindered by trade restrictions due to the alleged funding of Sierra Leone paramilitary groups. However, many large corporations have invested in Liberia, including Firestone Tire and Rubber Company, Sime Darby, BHP Billiton and ArcelorMittal.