LEBANON WILL HAVE ITS OWN CRYPTO-CURRENCY
The Governor of Banque du Liban has announced the launch of a new 100% Lebanese crypto-currency in the near future. The currency will be a “virtual Lebanese pound” destined exclusively for local use. It will be issued by Banque du Liban in Lebanese Pounds and its goal is to ease payment methods, to implement a technological transformation of financial institutions and to lower the costs borne by consumers.
Last October, the Parliament adopted a law on electronic transactions and personal data. Article 61 of the law makes the first official mention of “electronic and crypto currencies” in a jurisdictional text. The Parliament dodged the issue by giving the Central Bank full responsibility on the enactment of a regulatory framework for these currencies.
A digital form of an existing currency, such as the Lebanese Pound, would therefore act as a bridge between the real and the digital world, and improve banking inclusion by offering everyone the possibility to pass from physical money to a digital currency after opening an account at the Central Bank.
The Lebanese banking system would never have accepted the creation of a “stablecoin” or a decentralized crypto-currency, unregulated by Banque du Liban. Any such currency would significantly impact money transfers between the diaspora and Lebanon, which currently represent 20% of Lebanon’s GDP. A peer-to-peer decentralized crypto-currency would allow Lebanese to transfer money without having to pay banking fees.
Even when regulated and centralized, digital currencies may induce risks that the controlling authorities say they are fully aware of. For a healthy digital currency to emerge in Lebanon, authorities will have to respond to requirements of compliance, identity checks on the client (KYC), and the origin of the client’s funds (AML), which are the same as those undertaken by the traditional banking system. Yet, the procedures are very different, and are often based on the blockchain.