Historical Sketch

In the 16th century, the Ottoman Empire conquered the North African coast and established a rule over Tripoli. In the mid-17th, the influence was extended eastward into the Cyrenaica. The declining power of the Ottoman empire in the early 20th century invited Italy to occupy the territory in 1911. Initially referred to as Italian North Africa, the it was subdivided into the two colonies of Tripolitania and Cyrenaica and the province of Fezzan in 1927, just to get merged again into the Libya colony in 1934. During World War II, the Allied powers defeated Italy in North Africa. Libya was occupied and partitioned between the British (Tripolitania and Cyrenaica) and French (Fezzan). In 1949, the Cyrenaica attained autonomy, and in 1951 all the territories were united to form the independent Kingdom of Libya. The monarchy was overthrown in 1969, and a republic was proclaimed, which was restyled as "state of the popular masses" (in Arabic "jamahiriya", a neologism derived from the word "jumhuriya" for "republic") by the authoritarian ruler Gaddafi in 1977. The overthrow of ruler Gaddafi in 2011 triggered a civil war that continues until today. Despite the existence of a "Government of National Accord" the country is effectively partitioned into zones of influence which revive the traditional regions of Tripoli, Cyrenaica, and Fezzan.

Monetary History Overview

After the establishment of the North Africa colony in 1911, Italy introduced its accounting system. No local currency was introduced, the metropolitan banknotes and coins were sole legal tender. The Allied occupation forces of 1943 brought along their own currency systems. Cyrenaica took over the Egyptian currency, and Fezzan the Algerian. Only Tripolitania kept the Lira accounting, however using paper money introduced by the British military forces to replace the Italian notes and hence referred to as "Military Lira".

In 1951, the three territories were reunited, and Libya attained independence. The Libyan Pound was created as national currency in March 1952, and the three occupation currencies were withdrawn within a few months. The new currency was at par with the Pound Sterling until it repegged to the US Dollar in 1967, as Libya did not follow the British devaluation. In 1969, the Libyan monarchy was overthrown, and the new government nationalised the central bank, which had still been under British control. Two years later, the currency was renamed into Libyan Dinar. The peg to the US Dollar was retained until 1986, when the Dinar repegged for political reasons to the IMF Special Drawing Rights (SDR) unit. In the 1990s, the Dinar was slightly devalued twice, followed by a 66% cut in 2002 and a floating of exchange rate in the subsequent year. The Dinar kept a stable rate throughout the 2000s, and this remained so after the 2011 revolution and the civil war that is ongoing until present. The renewed partition of Libya after 2014 did not immediately affect the Libyan currency. However, the Central Bank of Libya has in fact been divided into a branch for Tripolitania and for Cyrenaica (operating in Beyda). This has led to the introduction of some Cyrenaican banknotes and coins which are not recognized outside. But the overall currency stability could be maintained.

Libya joined the International Monetary Fund (IMF) on 17.09.1958.

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