The Lebanese central bank governor declared that this step will restore confidence in the Lebanese banking sector.
Lebanon is facing its worst crisis since independence and the central bank is trying to turn things around.
Besides Lebanon, other struggling economies are also trying to introduce digital currencies.
The Lebanese central bank has completed its plans to introduce its digital currency next year. The country’s central bank will be the youngest currency regulator moving towards the introduction of a digital central bank currency (CBDC).
This initiative has been endorsed by the governor of the country’s central bank, Riyadh Salameh, and reported by the local National News Agency.
According to Salameh, the decision to introduce a CBDC will restore public confidence in the country’s banking sector as it moves towards a cashless economy.
Lebanon faces one of the worst financial crises since independence
Lebanon is facing one of its worst financial crises since independence in 1943, aggravated by the coronavirus pandemic and the port explosion in Beirut in August. Its national debt has risen to around 150%, making it one of the worst in the world. Although the country is under scrutiny by the central bank, many observers say it will be a huge challenge to turn things around in the financial sector.
However, the central bank is prepared to bring the country back to a stable financial situation by introducing various measures. The introduction of a CDBC is seen as one of the measures that can promote a return to a more balanced financial situation. The idea is to bring about greater financial participation and improve the liquidity of funds.
When the government defaulted on its debts in March, the Nanking sector gradually began to alienate the government. The gap between the private sector and the government became so wide that many people decided to store their money at home instead of depositing it in the bank. The governor of the Central Bank recently reported that Lebanese citizens now keep more than $10 billion in cash in their homes.
However, as part of the efforts to combat the financial crisis and a parallel economy, the Central Bank of Lebanon is joining other countries in initiating the introduction of a digital currency.
“We must prepare a Lebanese digital currency project” to boost confidence in the banking system, Salameh told local news agencies on Monday.
The plan to introduce a CBDC was announced last year, so no one will say they didn’t see it coming. The central bank has started work on the project and it seems that it has completed almost everything about the project.
The CBDC has priority
The digital currency was introduced about a decade ago. Now many countries are on the verge of developing their digital currencies, believing that this will make the financial sector easier and better. In addition to Lebanon, other struggling economies such as Venezuela are also looking at the prospect of introducing a digital currency.