Understanding the Lebanese Financial Crisis

Lebanon, a politically troubled but upper middle-income Middle Eastern state, is in the midst of a deep financial and political crisis. Banks have been intermittently closed since mid-October and depositors across the country are finding it impossible to gain access to dollar balances, the Financial Times reported in a commentary. While capital controls have not officially been introduced, it seems banks have taken it upon themselves to conserve liquidity and capital by dictating what level of funds clients can withdraw or transfer abroad. Dollar scarcity has led to a 30 per cent premium for physical cash dollars over the official exchange rate. (The economy is both highly dollarised and cash-oriented). Read more