Surrounding the depositor … no dollars, no pounds!

Khaled Abu Shakra – Call of the Fatherland

In a surprising move, it emerged that the Banque du Liban informed banks to lower the ceiling for cash withdrawals in LBP and significantly increase their costs to limit their ability to obtain paper money. This means, according to one banker, “the decrease in the ability of banks to pay in cash and their obligation to reduce the size of cash withdrawals to their customers.” According to the information, banks will begin in the coming days, specifically at the beginning of next week, to permanently stop payments through the fund, either for individuals or companies, in conjunction with the reduction of the amounts allowed to withdraw from the ATMs, and requiring all its customers to use electronic credit cards or electronic credit cards. Prepaid debit card for purchases. This will embarrass her in front of her clients and further deepen her disagreements with the mass of depositors who are outraged by the policies followed.

On the theoretical side, it seems that the decision aims to limit the influx of the monetary bloc in pounds, especially since it has risen since the beginning of the year by more than 13 billion pounds and reached the limit of 24 billion pounds. The goal behind this may also be, according to Jean Riachy, director of the FFA Private Bank Group, to control the expanding cash economy, which has begun to open the eyes of foreign countries to the possibility of escaping the control of money laundering. However, in the practical aspect, this generalization does not limit the inflation of the money supply, “since it is not necessary that the currency be printed only on paper ‘banknote’, since it can also be done electronically”, says Riachi . “But if the objective of the decision is to dry the cash from the hands of the merchants mainly, to limit the process of exchanging the pound for dollars in the secondary market, then, in return, it will stop the import operations and increase the contraction Merchants who collect money electronically will not be able, according to this decision, to convert it into cash. ” And they will not be able to continue with their business “unless this decision is accompanied by the introduction of a currency exchange business according to the market rate directly to the banks. Therefore, it can be a logical solution for merchants”, according to Riachi.

What the Banque du Liban is doing with this decision adds to the list of “incomprehensible” decisions. It cannot stop printing the currency, which is the main cause of inflation, because it is financing the expenses of the bankruptcy of the state. Nor does it help reduce the demand for the dollar because it continues with its supportive policy. Consequently, all that will result from this decision is more cuts in deposits and an increase in rates of economic contraction.