- Edited
I will summarize some key points that might be missing , and the repercussions of such decisions.
The last circular No. 573 by which the Banque du Liban imposed on importing companies to pay the amounts due to them to the bank in Lebanese pounds in cash, and not by means of bank checks or transfers, prompting companies and institutions to suspend accepting bank cards and require consumers to pay in cash only. The first of these signs appeared at gas stations, many of which announced that payments through bank cards would not be accepted, in order to obtain cash in pounds, in line with the circular of the Banque du Liban.
As for the decision of the Banque du Liban to set a ceiling for bank withdrawals from it in lira, and to impose fees and interest on withdrawing any monthly amounts exceeding 5 billion pounds for each bank, it prompted the banks to throw the fire ball in the range of banking clients, so the ceilings for cash withdrawals were reduced, to avoid having to withdraw cash from a bank Lebanon surpassed the estimated amount by 5 billion lira. It is evident that the measures taken by the banks to reduce the ceilings of cash withdrawals and limit them to bank cards are reflected in the scarcity of cash liquidity in the hands of citizens.
Away from the objectives of the Central Bank of the circular and the decision, which is summarized by reducing the level of liquidity in Lebanese pounds, and thus reducing the demand for the dollar, and at the expense of deepening the social crisis, the question remains, how will the mechanism of bank withdrawals become? In what cases can bank cards be used?
Many banks have begun to reduce their ceilings for cash withdrawals on dollars and pounds through ATMs, whether for individuals or companies. Among those banks, Fransabank, Bank of Beirut, the Arab Countries, the Lebanese Swiss Bank, the Mediterranean Bank, the Lebanon Overseas Bank and other banks, it is expected that the reduction process will apply to the rest of the banks during the next few days.
The constant in the new procedures is that cash withdrawals on the fund (or countires) in banks will stop completely, whether from the lira or dollar accounts, and cash withdrawals will be restricted to ATMs only. However, according to ceilings that are much lower than what was previously permitted. For example, banks reduced cash withdrawals in dollars (that is, from dollar accounts) to less than $ 1,000 a month. The ceiling is reduced according to each bank, provided that the withdrawal exchange rate remains 3,900 pounds, in line with BDL Circular No. 151. As for withdrawals from accounts in Lebanese pounds, their ceilings are also reduced to less than half, as the ceiling set at most banks does not exceed 2 million pounds per week. .
It is striking that the low ceilings for cash withdrawals include large and small depositors, so there is no differentiation between them in terms of the size of the withdrawals. Likewise, owners of domiciled accounts, public sector employees and members of the security services will have to withdraw their salaries through ATMs, and not from bank funds.
By reducing the ceilings for withdrawals, banks tend to compel customers to use electronic bank credit cards and debit cards in purchases from the Lebanese market. Therefore, banks are expected to transfer the installments of their borrowers from one bank to another according to the requirements, in order to prevent the cash withdrawal from the lira.
The main problem facing the process of using bank cards is to determine the exchange rate of the dollar in bank accounts. Al-Modon learned that a number of banks, including Byblos Bank, allow customers to transfer services from one dollar to one dollar according to the exchange rate of 3900 pounds to the dollar, which facilitates the process of using bank cards in purchases and dispensing with cash, if the commercial institution provides the electronic payment mechanism.
But with the banks that have not introduced the conversion service from dollars to pounds according to the price of the platform, the holders of their dollar accounts must use their cards according to the exchange rate of 1505 pounds to the dollar in purchases priced according to the black market exchange rate for the dollar, and these will almost completely gnaw their deposits.
As for the institutions, shops and companies that refuse to pay through bank cards, the citizen must then dispense with their products, due to his inability to pay in cash, which is what the Banque du Liban targets through its circulars and decisions, i.e. reducing consumption, even if this leads to a hitting the citizen's living capacity and creating more recession.
The objective of the Central Bank of Lebanon through these measures may be achieved temporarily and calm the rise of the dollar. However, this will not succeed in the medium term. All these measures ultimately only lead to more inflation. The Bank of Lebanon has pumped the lira into the market in huge quantities in light of the weak production, and comes today to withdraw the pound, to relieve pressure on it and reduce the dollar. The market is through imported goods, the price of which will be charged in lira in cash. The result will be a vicious circle. The measures will only buy time pending the formation of a government and finding solutions and exits to the crisis.
Similar to the current existence of a cash dollar in the market and a lollar (or bank dollar), a cash lira and a bira (or bank lira) will be introduced. As with the lollar, so is the bira. Their value is between 30 and 60 percent less than the monetary dollar and the pound.
As long as the Banque du Liban imposed on importers to pay about 85 percent of the value of imports in cash, and not through transfers or checks, this means that a difference will occur in prices between the cash and the pound in banks, similar to the difference between the cash dollar and the bank dollar, or what is known as "lollar". I expect that the value of the lira in cash (1 lira) will be approximately 1.25 liras in the bank. Imposing payment on importers in lira in cash would create a sudden and enormous demand for lira in cash, which means that the lira “cash” is no longer equal to that deposited in banks.
It is likely that a banking source will deal in the near term with lira checks, with a discount of between 15 to 20 percent of them, just as is currently the case with dollar checks.
The last circular No. 573 by which the Banque du Liban imposed on importing companies to pay the amounts due to them to the bank in Lebanese pounds in cash, and not by means of bank checks or transfers, prompting companies and institutions to suspend accepting bank cards and require consumers to pay in cash only. The first of these signs appeared at gas stations, many of which announced that payments through bank cards would not be accepted, in order to obtain cash in pounds, in line with the circular of the Banque du Liban.
As for the decision of the Banque du Liban to set a ceiling for bank withdrawals from it in lira, and to impose fees and interest on withdrawing any monthly amounts exceeding 5 billion pounds for each bank, it prompted the banks to throw the fire ball in the range of banking clients, so the ceilings for cash withdrawals were reduced, to avoid having to withdraw cash from a bank Lebanon surpassed the estimated amount by 5 billion lira. It is evident that the measures taken by the banks to reduce the ceilings of cash withdrawals and limit them to bank cards are reflected in the scarcity of cash liquidity in the hands of citizens.
Away from the objectives of the Central Bank of the circular and the decision, which is summarized by reducing the level of liquidity in Lebanese pounds, and thus reducing the demand for the dollar, and at the expense of deepening the social crisis, the question remains, how will the mechanism of bank withdrawals become? In what cases can bank cards be used?
Many banks have begun to reduce their ceilings for cash withdrawals on dollars and pounds through ATMs, whether for individuals or companies. Among those banks, Fransabank, Bank of Beirut, the Arab Countries, the Lebanese Swiss Bank, the Mediterranean Bank, the Lebanon Overseas Bank and other banks, it is expected that the reduction process will apply to the rest of the banks during the next few days.
The constant in the new procedures is that cash withdrawals on the fund (or countires) in banks will stop completely, whether from the lira or dollar accounts, and cash withdrawals will be restricted to ATMs only. However, according to ceilings that are much lower than what was previously permitted. For example, banks reduced cash withdrawals in dollars (that is, from dollar accounts) to less than $ 1,000 a month. The ceiling is reduced according to each bank, provided that the withdrawal exchange rate remains 3,900 pounds, in line with BDL Circular No. 151. As for withdrawals from accounts in Lebanese pounds, their ceilings are also reduced to less than half, as the ceiling set at most banks does not exceed 2 million pounds per week. .
It is striking that the low ceilings for cash withdrawals include large and small depositors, so there is no differentiation between them in terms of the size of the withdrawals. Likewise, owners of domiciled accounts, public sector employees and members of the security services will have to withdraw their salaries through ATMs, and not from bank funds.
By reducing the ceilings for withdrawals, banks tend to compel customers to use electronic bank credit cards and debit cards in purchases from the Lebanese market. Therefore, banks are expected to transfer the installments of their borrowers from one bank to another according to the requirements, in order to prevent the cash withdrawal from the lira.
The main problem facing the process of using bank cards is to determine the exchange rate of the dollar in bank accounts. Al-Modon learned that a number of banks, including Byblos Bank, allow customers to transfer services from one dollar to one dollar according to the exchange rate of 3900 pounds to the dollar, which facilitates the process of using bank cards in purchases and dispensing with cash, if the commercial institution provides the electronic payment mechanism.
But with the banks that have not introduced the conversion service from dollars to pounds according to the price of the platform, the holders of their dollar accounts must use their cards according to the exchange rate of 1505 pounds to the dollar in purchases priced according to the black market exchange rate for the dollar, and these will almost completely gnaw their deposits.
As for the institutions, shops and companies that refuse to pay through bank cards, the citizen must then dispense with their products, due to his inability to pay in cash, which is what the Banque du Liban targets through its circulars and decisions, i.e. reducing consumption, even if this leads to a hitting the citizen's living capacity and creating more recession.
The objective of the Central Bank of Lebanon through these measures may be achieved temporarily and calm the rise of the dollar. However, this will not succeed in the medium term. All these measures ultimately only lead to more inflation. The Bank of Lebanon has pumped the lira into the market in huge quantities in light of the weak production, and comes today to withdraw the pound, to relieve pressure on it and reduce the dollar. The market is through imported goods, the price of which will be charged in lira in cash. The result will be a vicious circle. The measures will only buy time pending the formation of a government and finding solutions and exits to the crisis.
Similar to the current existence of a cash dollar in the market and a lollar (or bank dollar), a cash lira and a bira (or bank lira) will be introduced. As with the lollar, so is the bira. Their value is between 30 and 60 percent less than the monetary dollar and the pound.
As long as the Banque du Liban imposed on importers to pay about 85 percent of the value of imports in cash, and not through transfers or checks, this means that a difference will occur in prices between the cash and the pound in banks, similar to the difference between the cash dollar and the bank dollar, or what is known as "lollar". I expect that the value of the lira in cash (1 lira) will be approximately 1.25 liras in the bank. Imposing payment on importers in lira in cash would create a sudden and enormous demand for lira in cash, which means that the lira “cash” is no longer equal to that deposited in banks.
It is likely that a banking source will deal in the near term with lira checks, with a discount of between 15 to 20 percent of them, just as is currently the case with dollar checks.
