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In order not to misunderstand the context, it is important to note that the triple financial – monetary – banking collapse began years ago, and the date of October 17, 2019 was nothing more than a milestone linking the collapse and the acceleration of its repercussions. Hours before this date, “trust” between the banks and their clients, and between the people and the regime, had diminished, but it was already installed. In other words, it was possible, at that time, to arrive at a rescue path less painful than the distractions that laid out the current path. What happened is that “confidence” has been destroyed by the bankers themselves. That night, under the pretext of the attack on the facade of a bank in downtown Beirut and the blocking of roads, the Association of Banks decided to close completely. A decision that the banks had not made throughout the years of the civil war in all its madness
Thus, the “confidence” that had been gradually eroding since the second half of 2016, when the Governor of the Banque du Liban, Riad Salameh, unleashed a series of so-called “financial engineering”, gave the banks huge profits and allowed Many speculators invest in dollar loans to the Bank of Lebanon for a year and then transfer their capital. And its benefits at maturity, and Salama bought more time at an exorbitant cost that was paid out of depositors’ pockets. The pace of engineering did not stop in the months that followed and so did the interest rate. The few who paid attention to what the high interest rate meant (the interest rate on deposits that were attracted by the engineering stake reached about 22% over the dollar, and before that), they constituted the first segment that it eroded the confidence of the banks and the Bank of Lebanon. When its investments in Engineering 2016 expired, that is, in June 2017, this segment withdrew its capital from Lebanon. Then “confidence” began to fall another tranche when, in early 2019, the Banque du Liban issued a circular prohibiting the payment of automatic transfers through non-bank institutions in dollars and imposing their payment in pounds. Later, an additional group also fell when it issued a circular in mid-July restricting banking services to customers. Then the most famous Circular (530) was issued at the end of September 2019, which specifies the commodities that will be supported by imports in BDL dollars. This generalization, which distinguishes between the prices of subsidized goods and those financed in dollars in the parallel market, represents the first official recognition of the existence of the parallel exchange rate market, but recognizes the legitimacy of what they have and a scope of work which includes unsupported assets.
