The Lebanese Central Bank plans to introduce a digital currency next year to restore confidence in the banking sector and shift to a cashless system said Governor Riad Salame.
The Bank for International Settlements published a study that found that about 80% of central banks are active in this area, with half examining wholesale and general purpose CBDCs. About 40% of central banks have switched from concept research to experimentation or proof of concept, while another 10% have developed pilot projects.
Digital Currency Initiative
Governor Riad Salame asked the bank in a recent announcement to begin restructuring, including a 20% recapitalization.
He added that Lebanon lacks natural resources and needs to protect gold as it is an asset that can get liquidated in foreign markets in an inevitable and decisive crisis.
Earlier, Riad Salame gave a live video speech in response to the recent allegations made against him by the newly appointed Lebanese Prime Minister Hassan Diab of the Lebanese pound’s current depreciation against the US dollar and appreciation of raw materials and products.
While most of the speech focused on defending these allegations, explaining why Lebanon’s budget position is today, who is to blame, and what the central bank has done to address the issue, the governor reiterated his intentions to the CBDC initiating other digitization efforts.
Lebanese Central Bank Efforts Towards CBDC
Lebanese Central Bank Governor Riad Salame discussed various new digital initiatives and solutions designed to help businesses and Lebanon’s financial sector.
The first solution is the recently announced Oxygen Platform, which will create a market for trade finance and mutual funds needed by the manufacturing and agricultural industries. Salame said the central bank has allocated $ 100 million for the platform and is working with the Lebanese Ministry of Production to raise an additional $ 650 million to purchase raw materials for agriculture and manufacturing.
Another central bank project is Financial Marketplace, which allows Lebanese companies inside or outside of Lebanon to raise funds by investing in their stocks or bonds. As Riyad said, “We are building a regulated financial market on an electronic platform that will soon be ready to trade in stocks and bonds of Lebanese companies.”
He reiterated that the central bank would introduce a digital currency with centralized support in his speech, creating a more cost-effective payment method from Lebanon.
Lebanon had already permitted Peer to Peer payments, which is significant if coupled with a Central Bank Digital Currency. More than 18 central banks worldwide are studying the use of digital currencies with central support. It includes studies on the impact of digital currencies on monetary policy and financial stability, showing how popular CBDCs are becoming.