Lebanon to set up CBDC project with central bank backing

Lebanon’s central bank announced that it plans to develop a new digital currency in 2021 to explore the potential uses of a CBDC for the economic and financial situation in the country. Central bank governor Riad Salameh outlined that the core benefit of this project is to facilitate the effectiveness of future monetary activities locally and abroad through a cashless financial system’s implementation. Many nations and central banks are looking at CBDCs for similar reasons.

Remittances play a major role in Lebanon's economy. According to the World Bank, in 2019 personal transactions accounted for almost 14% of Lebanese gross domestic product. The figure in 2004 was up to 26.4%. The central banker stated Lebanon gold reserves will be kept as a precaution against a broader downturn in the bank's financial position. In the event of a crisis, the central bank would sell its bullion on the global market.

In face of economic and financial challenged, local banks have tightened limits on foreign currency withdrawals by issuing restrictions on withdrawals. The increasing uncertainty surrounding fiat currency led to Bitcoin purchasing among local people and a dramatic rise in activity in peer-to-peer markets such as LocalBitcoins. This mirrors the popularity of bitcoin in other nations.

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