In July, LIMS continued the campaign to generalize the dollarization experience that started in the tourism industry for the summer season. LIMS explained that the Ministry of Economy and Trade should learn a lesson from the Ministry of Tourism and allow the entire private sector to dollarize prices. In fact, the Lebanese pound (LBP) has been experiencing continuous devaluation and instability, making the currency increasingly unusable. Instead, every industry in Lebanon could benefit from a stable currency such as the US dollar. Allowing such a move would then permit salaries to be dollarized, as businesses can only pay wages in dollars, if they charge for their goods and services in USD. If implemented, dollarization could become popular in the private sector, which could then expand to the public sector.

On another hand, Lebanon still imposes capital controls on “old dollar” accounts, which are dollars deposited at Lebanese banks before the start of the crisis in November 2019. LIMS noted that the old US dollar accounts, should be seen as part of the LBP supply since depositors are only allowed to withdraw them in LBP at an unfair rate set by the central bank. They can also be used to demand “fresh dollars” fueling devaluation and hyperinflation. Consequently, the central bank’s new circular further enhancing capital controls is aimed at slowing down the path of devaluation.

Given those schemes, LIMS sees the dollarization of the economy inevitable. The only possible way to keep the LBP is by adopting a currency board. Establishing a fully functional currency board would guarantee the stability of the LBP by cloning the US dollar through a rule-based monetary arrangement that requires 100% reserves at all times.

• Accumulated Inflation Since The Start Of The Crisis Between 1,178% And 2,157%. July 4, 2022: Nidaa Al Watan, Article AR
• It Is Preferable To Allow The Dollarization Of Prices, Instead Of Issuing A One Million LBP Banknote. July 12, 2022: SBI, TV Interview AR
• Central Bank Limits The Ability To Deal With Restricted Dollars Preparing For A Haircut, July 15, 2022: Al Jadeed, TV Interview AR
• Goodbye Dollar…What Is The Alternative? July 15, 2022: SBI, Radio Interview AR
• Between Cash Economy And Fate Of Banking Industry…Where Is The Economy Heading? July 19, 2022: Addiyar, Article AR
• Fears Of Paying In Fresh Dollar Card Payments Exist, July 20, 2022: Grand LB, Article AR
• Will Lebanon Relinquish Its Financial Sovereignty And Adopt The Dollar As An Official Currency? July 21, 2022: Independent Arabia, Article AR