Conflicts between depositors and banks have continued. Armed and non-armed depositors broke into banks demanding their dollar-denominated deposits to be paid to them in dollars, prompting banks to strike.

LIMS explained that total deposits at the Lebanese banks add up to around 100 billion US dollars. Still, the central bank holds only 10 billion USD in foreign exchange reserves. Even if commercial banks are liquidated, the sum won’t exceed 20 billion US dollars. In other words, depositors have lost most of their deposits regardless of the banks’ strike. This loss is seen via the “lirafication” of their withdrawals. Such happens when deposits in dollars are being settled by the local currency—the Lebanese pound (LBP)—at a lower value than the market rate. To illustrate, this low value is in the range of 8,000 to 12,000 LBP to the dollar while the market rate averages around 38,600 LPB to the dollar, effectively forcing a haircut on withdrawals. The Lebanese government is currently negotiating with the IMF on a plan that would impose a direct haircut on deposits (instead of the lirafication of withdrawals) to settle the banking crisis. 

LIMS Media Interviews: 

• BBC Extra: Partial Bank Closures In Lebanon Continues, October 13, 2022: BBC Arabic, Radio Interview AR