As part of Lebanon’s broader effort to address its economic and financial crisis, the troubled Middle Eastern country’s central bank plans to launch a new digital currency in 2021, Cointelegraph reports.
Central bank governor Riad Salameh told a gathering of officials Monday,“We must prepare a Lebanese digital currency project” as a way to boost confidence in the banking system.
“As for the monetary supply in the Lebanese market, it is estimated that there are $10 billion stored inside homes,” Salameh said, according to the state-run National News Agency.
Salameh added that a digital currency project launched in 2021 – a “regulatory mechanism” – will help implement a cashless financial system to improve the flow of money locally and overseas.
Lebanon is heavily reliant on remittances from its enormous global diaspora. In 2019, personal remittances constituted nearly 14% of Lebanon’s GDP, according to the World Bank. That figure was as high as 26.4% in 2004.
Salameh said Lebanon will maintain its gold reserves as a hedge against a wider market crisis. If such a crisis occurs, the central bank can liquidate its bullion on foreign markets for immediate relief.
Banque Du Liban, the country’s central bank, has been considering a central bank digital currency (CBDC) since at least 2018. This has become a more urgent matter since violent protests and silent bank runs brought Lebanon’s financial system to a halt earlier this year.
In June, protestors set fire to the central bank in Tripoli in a show of anger over the collapse of the lira, which had long been pegged at 1,500 per US dollar. The lira would eventually plummet to more than 5,000 per dollar before restabilizing.
The growing confusion over Lebanese fiat triggered a wave of bitcoin buying among locals, with peer-to-peer marketplaces like Localbitcoins seeing a sharp rise in activity.