In Lebanon, the fall of the pound has reached a new record, and inflation is in full swing. As a result, the population began to attack banking establishments, according to several local reports. A look back at the collapse of the Lebanese economy, and its consequences.
In Lebanon, the crisis continues to deepen
According to local reports, the Lebanese Pound (LBP) has hit an all-time low. A dollar would now be worth 80,000 LBP in the unofficial foreign exchange markets that exist in Lebanon. As a reminder, the government had already decided to officially devalue the currency less than a month ago, bringing it down to 15,000 LBP per dollar.
The Lebanese also faced a bank strike, initiated at the beginning of February. These have ceased to offer services other than those which can be accessed via vending machines. The institutions thus intend to force the hand of the government, so that the latter limits the withdrawals of foreign currencies and the Lebanese pound for their customers.
Faced with this, the Lebanese who have already seen their savings reduced to nothing in the face of the catastrophic fall of the pound, have started to attack the banks. According to a recent Reuters report, protesters attacked several banking institutions in Beirut with several outbreaks of fire.
Lebanese can no longer access their funds
The economic crisis in Lebanon means that most depositaries can no longer access their funds stored by banking institutions. As these restrictions were not decided at government level, some customers sued financial institutions. This is partly why the banks want formal approval from Beirut.
For the moment, the banks have no plans to reopen, and no solution seems to have been found. The system operates under an illusion of liquidity, where institutions pretend to still be valid, despite having suffered colossal losses. A report published in 2020 indicated that all banks in Lebanon studied were insolvent.
Faced with this, international aid is particularly scrutinized. The International Monetary Fund (IMF) had indeed offered aid of up to 3 billion dollars, but under conditions. And these conditions are still not met, with the IMF noting that progress in this direction has been very slow. Moreover, the sum would not be enough: the report quoted above estimated that at the time it would have required a contribution of 67 billion dollars to save the 14 main Lebanese banks.
Faced with this, the Lebanese have little choice, and some are turning to alternative assets – including cryptocurrencies – in an attempt to save savings. The crisis in Lebanon is in any case a telling example that access to one’s own funds is really an issue of democracy, a position recently shared by the Human Rights Foundation.