Lebanon to launch digital currency in face of economic and financial turmoil

Published on by Cointele | Published on

Lebanon's central bank plans to launch a new digital currency in 2021 as part of a broader effort to combat a parallel economic and financial crisis that has engulfed the country.

Central bank governor Riad Salameh told a gathering of officials Monday that "We must prepare a Lebanese digital currency project" as a way to shore up confidence in the banking system.

The central banker added that a digital currency project launched in 2021 will help implement a cashless financial system to enhance the flow of money locally and abroad. Lebanon relies heavily on remittances from its vast global diaspora.

In 2019, personal remittances represented nearly 14% of Lebanese GDP, according to the World Bank.

If such a crisis occurs, the central bank can liquidate its bullion on foreign markets for immediate relief.

Banque Du Liban, the country's central bank, has been kicking around the idea of a state-run digital currency since at least 2018.

Efforts appear to have accelerated earlier this year after violent protests and silent bank runs brought Lebanon's financial system to a halt.

Faced with a dollar crisis, banks tightened restrictions on foreign currency transactions, with at least one major institution limiting withdrawals to just $400 a month.

A plunging Lebanese lira made it almost impossible to transact in the local currency.

In June, protestors set fire to the central bank in Tripoli in a show of anger over the collapse of the lira, which had long been pegged at 1,500 per U.S. dollar.