The Central Bank of Liberia (CBL) has issued a clarification on the recent publication surrounding Directive No. CBL/ID/DIR/001/2025, which introduces regulatory requirements for institutions issuing insurance-backed court bonds.
According to the CBL, the formulation of this directive began in 2022, with the aim of enhancing financial soundness, transparency, and accountability within Liberia’s financial sector.
Background and Consultation Process
The CBL indicated that the reform was initiated after the Supreme Court of Liberia expressed concerns over the reliability of appellate bonds issued by insurance companies lacking financial standing to honor such obligations.
The Bank intimated that a comprehensive two-year consultation process involving the judiciary and insurance sector stakeholders followed, with key milestones including:
Meeting with Industry Players: December 23, 2024
Second Invitation from the Supreme Court: March 4, 2025
Submission of Draft Directive: March 7, 2025
Finalization of Directiv: May 2, 2025
Formal Circulation: May 16, 2025
Purpose and Key Clarification
The directive introduces compliance requirements to ensure institutions issuing court bonds possess necessary financial capacity and regulatory credibility.
Key clarifications include:
No Prohibition: The directive does not prohibit the issuance of court bonds nor impose a suspension.
Pre-approval and Accountability: It introduces a pre-approval and accountability process to ensure only financially sound institutions issue bonds.
Constitutional Rights: The directive does not infringe on constitutional rights, including the right to bail.
CBL’s Commitment
The CBL reaffirms its commitment to strengthening institutional integrity, enhancing transparency, and protecting public interest.
The Bank will continue to engage with the judiciary, legal community, and financial institutions to ensure smooth implementation of this reform, the release stated.
