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  • Lebanese Banks Capital Control

Since Capital Controls will be official soon and they are being discussed in cabinet meetings, we need to keep an eye and share the final decision once approved here.

Let us avoid rumors circulating.
I dont think it will be official, the speaker of the cabinet said, when asked, they're leaning towards dismissing it.
9 days later
Two circulations were issued today by BDL:

In Short

Circulation 1 :

If a depositor has<= 5 million LBP the bank will buy it @ 1500 rate- official rate ( assume 5 million LBP / 1500 = 3333USD & sell back to you depending on the market rate on the day of withdraw

If a depositor has <= 3k USD they will give LBP depending on the market rate on the day if withdraw.

Circulation 2:

Establishing a unified electronic hub (between exchangers , Banks , snd BDL) for day to day market exchange rare of all foreign currencies including USD.






Are we shifting towards removing the peg on the LL completely? Because those like the first step towards that.
Any input on the above is appreciated because I do not think I fully understand the consequences of these steps.
It looks like they are trying to ease the demand for actual dollar notes by giving LL's at the market rate. In theory, it should, at least initially, ease the demand for notes, but yeah, it looks like the peg is gone for now. They may try to control where the dollar is by including the exchanges too---the government could conceivably demand the exchanges adjust their rates too, but we will have to see how the system is set up and controlled.
It seems like the first step to remove the peg, but major elements such as the gasoline price / medical imports etc, that the BDL sponsor access to dollars are still at 1500.
Draguen wroteIt seems like the first step to remove the peg, but major elements such as the gasoline price / medical imports etc, that the BDL sponsor access to dollars are still at 1500.
Not necessarily remove (although it should be done that way), but regulate the US dollar price.
By giving people access to a certain amount of USD, most of them of this class will need to sell the USD at black market price to get LBP (hence to be able to purchase food etc.) making the black market price even lower and profiting the poorer class.
I think it's a good step IMO.
They are trying to set aside a big portion of depositors (60%) that are very sensitive to the capital control. The real battle is yet to come, I think this is an indication that there is something bad coming.

(No USD withdrawal in the future).

Besides, how many exchange rates will we have?!!!
I don't understand the 5million LBP part. If my money is 5million LBP why do they want to give me profit out of it? Am I missing something?
Adnan wroteI don't understand the 5million LBP part. If my money is 5million LBP why do they want to give me profit out of it? Am I missing something?
1)To be able to pay salaries in bank accounts
2)60% of depositors, majority
2.1)Who crowd banks daily to get their tiny cut of cash
2.2)Who is most capable to go to streets
nuclearcat wrote
Adnan wroteI don't understand the 5million LBP part. If my money is 5million LBP why do they want to give me profit out of it? Am I missing something?
1)To be able to pay salaries in bank accounts
2)60% of depositors, majority
2.1)Who crowd banks daily to get their tiny cut of cash
2.2)Who is most capable to go to streets
They get rid of you by closing your bank account for good, thats the condition, or so I've heard.
edit: if you mean why not only usd holders: to not to have bad reputation, to make people believe that their lbp will always be safe, to be honest, it's not gonna cost them a lot anyway.
Imagine they didn't do this, 1 year from now, I win 10millions, i want to put them in the bank, i remember that oh! one year ago they screwed lbp holders and i won't put it in the bank: it's history that matters
VincentKeyboard wroteHow will this affect prices of goods?
IMO badly.
Lot of LBP flow to market, no USD flows from banks (people was getting their $100-$200 and selling to sarraf, this was making supply of USD cash). This means significant LBP devaluation.
nuclearcat wrote
VincentKeyboard wroteHow will this affect prices of goods?
IMO badly.
Lot of LBP flow to market, no USD flows from banks (people was getting their $100-$200 and selling to sarraf, this was making supply of USD cash). This means significant LBP devaluation.
The price of most goods is already reflected in the black market price, but things denominated in foreign currency like fuel, medicines and other items will be hit pretty hard, at least initially. They may be trying to soften the blow a bit with this current move and I think they are preparing for an IMF loan. One of the conditions would be to remove the peg, and this is a way to do it, without saying they are doing it.

Also, I am led to believe that the money flowing from banks to customers to sarafeen was leaving the country and heading to Syria and elsewhere. Apparently, the premium on the dollar there is greater than it is here so this is one of the reasons why the sarafeen aren't selling too many dollars, but buying as much as they can.
dsoftware.king wroteThey are trying to set aside a big portion of depositors (60%) that are very sensitive to the capital control. The real battle is yet to come, I think this is an indication that there is something bad coming.

(No USD withdrawal in the future).

Besides, how many exchange rates will we have?!!!
This. Exactly what's going to happen.
And just to put more context to all this, please note that the total value of all these accounts covered by the BDL circular is between 800 million and one billion USD. That's it. Yes the lowest 60% own nothing more than 1 billion.

Wealth inequality clear and simple.
Like you said, It is 60% of the accounts not depositors. Big difference since many depositors have multiple accounts and usually one of them is just for small amounts.
But still, there IS wealth inequality in Lebanon for sure