Lebanese pound

Lebanese pound. The Lebanese pound is the official currency of the Lebanese Republic, issued by the nation's central bank, the Banque du Liban. Its ISO code is LBP, and it is subdivided into 100 piastres, though these subunits have been rendered obsolete by prolonged inflation. The currency has experienced catastrophic devaluation since 2019, becoming a central symbol of the country's severe financial and economic crisis.

History

The currency was first introduced in 1924, during the French Mandate for Syria and the Lebanon, replacing the Egyptian pound and pegging its value to the French franc. Following Lebanese independence in 1943, the Banque du Liban was established in 1964, taking over sole issuance. For decades, it was considered a stable currency, famously pegged at 1,507.5 to the United States dollar from 1997 until 2019. This stability was shattered by a combination of factors including prolonged government deficits, a massive public debt burden, and systemic corruption within institutions like Électricité du Liban. The 2019–present Lebanese financial crisis triggered the collapse of the fixed exchange rate, leading to a rapid, unregulated devaluation on the parallel market.

Coins and banknotes

Early coinage featured denominations in piastres and pounds, often bearing symbols like the Lebanese cedar. Modern coin production ceased as inflation rendered small denominations worthless. Banknote series have evolved significantly, with recent issues reflecting much higher values. Current circulating notes include the 1,000, 5,000, 10,000, 20,000, 50,000, and 100,000 denominations, with designs showcasing national heritage sites such as the Temple of Bacchus at Baalbek and the Byblos Citadel. Older series, including notes depicting figures like Riad Al Solh and Moussa Sadr, remain legal tender but are rarely seen.

Exchange rates and inflation

The official pegged rate of 1,507.5 to the United States dollar remains on the books but is inaccessible for most transactions, applying only to select imports like fuel and medicines. The actual exchange rate is determined by a volatile parallel market, where the value has depreciated by over 98% since 2019, occasionally exceeding 100,000 LBP per dollar. This has resulted in one of the world's highest inflation rates, with annual inflation consistently measured in triple digits by organizations like the World Bank. The dramatic divergence between the multiple exchange rates has crippled the banking sector and evaporated citizens' savings.

Monetary policy and regulation

Monetary authority rests solely with the Banque du Liban, governed by the Code of Money and Credit. For over two decades, its primary policy was maintaining the fixed peg through extensive foreign currency reserves, a strategy that ultimately proved unsustainable. The central bank has employed complex financial engineering mechanisms, such as the controversial "financial engineering" operations under former governor Riad Salameh, which are now under scrutiny by international investigators. Current policy is largely reactive, focusing on managing the rationing of dollars for essential imports amidst dwindling reserves, while the country engages in protracted negotiations with the International Monetary Fund.

Economic impact and challenges

The currency collapse is the core of the national economic disaster, triggering a contraction in GDP comparable to the Great Depression. It has led to widespread poverty, a collapse in public services, and a massive brain drain as professionals emigrate. The crisis has severely impacted key sectors like tourism, real estate, and agriculture. A major challenge is the government's inability to implement reforms demanded by the International Monetary Fund and international donors, including restructuring the banking sector and addressing losses at the Banque du Liban. The situation is further complicated by ongoing political deadlock, the aftermath of the 2020 Beirut explosion, and regional geopolitical tensions involving actors like Hezbollah and Syria.

Category:Economy of Lebanon Category:Currencies of Asia Category:Modern obsolete currencies