What is the Lebanese currency and where it comes from
The official currency of Lebanon is the Lebanese pound. The pound was formed by 100 coins, but high inflation in the country has eliminated this division. Due to the French occupation of Lebanon, Lebanese coins and bank notes are bilingual, both in Arabic and French. Banque du Liban was in charge of the development of the currency in Lebanon. It had to ensure transferability, protection for its value, and supervision from the banking institutions in the country. However, it played a critical role in this.
Before the World War I, Lebanon was part of the Ottoman Empire and therefore the Ottoman lira was the currency at the time. After the fall of the Ottoman Empire in 1918, the Ottoman lira was replaced with the Egyptian pound, which was commissioned by the joint British and French mandate. When Lebanon was completely taken under the French mandate, the Egyptian pound was replaced and ensured by the Banque du Syrie, an affiliate of the French Ottoman Bank. The Lebanese currency remained linked to the French franc until 1941. Currently, the Lebanese pound is the legal tender in Lebanon, issued by the Banque du Syrie.
The collapse of Lebanon’s currency in today’s history
Lebanon is now facing an unprecedented economic crisis and the local currency has already lost about 60% of its value. Citizens are protesting against the government and its methods of handling the economic crisis that led to the deterioration of people’s living situation, to the drop of the Lebanese currency and the devastation of people’s savings. Prices went up and inflation took place. It’s safe to say that this is the country’s worst economic crisis that has ever took place in decades.
After the Lebanese government imposed a nationwide lockdown in March after the coronavirus outbreak, the economy completely collapsed allowing unemployment and business closures to happen. Prices of basic goods have massively inflated, in some cases even by over 60%. The living situation had drastically deteriorated since Covid-19 and the Beirut explosion. Prices have doubled and people are reluctant to buy any product, essentials included.
The Lebanese pound, secured to the U.S. dollar, has lost about 60% of its value. People are not able to withdraw dollars from their bank accounts due to capital controls that dictates that withdrawals must be made in the local currency. The two currencies have been both used in Lebanon at the same time and many people have kept their savings in dollars, which previous the crisis, could be freely withdrawn from banks. As the pound lost value, banks began restricting dollar withdrawals, leaving people with little or nothing. This played the role of a ‘plain robbery’ to the Lebanon’s population.
Why protestors are so angry against the failed policies of the Central bank and Government
Lebanese Prime Minister Hassan Diab has distanced the government from the central bank’s policies that, he states, led to the collapse of the local currency. He declares that the government was not consulted in the actions of the bank allowing all depositors to withdraw money from their foreign currency accounts while the local currency was decreasing in value. The central bank states instead, that it’s only because of them that the country haven’t gone bankrupt in the last 30 years. They blame the government to be the cause of the inflation and corruption in Lebanon.
Protesters in Lebanon have been shaken by the situation and therefore decided to defy the nationwide lockdown and curfew to be able to protest against the government. They believe the Central Bank and the government worked together into staggering debts in Lebanon, for private reasons and maybe benefits.
Lebanon is one of the most indebted countries in the world. The economic meltdown led to anti-government protests that erupted in the incentive of the spread of the coronavirus pandemic. The process of local and moral restructuring in Lebanon’s trust and faith for the prime institutions, would lead to further undermining confidence in Lebanon locally and internationally, as Lebanon’s population trust has already been shattered. Lebanon can easily flow into becoming a state of lawlessness in the next near future.