Faith in the stability of the current Lebanese banking system, including the Lebanese pounds, is being shaken, as residents badly complain of increasing restrictions on foreign currency movements, Aljazeera reported on Tuesday.
The constant declining performance of banks could be related to the economic crisis in the country over decades, and it is safe to say that the situation is pushing the Lebanese banks to an extreme point of collapse. In response, banks are continuing to introduce stringent actions purported to save the economy.
After a popular uprising first swept the country in the past months, the banks reportedly began introducing restrictive informal capital controls. This forced residents to withdraw their savings in Lebanese pounds at a rate that devalues their savings by 40% than its worth on the parallel market.
As of recent, the foreign currency withdrawals were limited to between $50 and a few hundred dollars per month. Also, the transfers abroad were capped at $50,000 for one year, citing “necessary matters,” according to Aljazeera.
Resident Loses Half of The Savings to Lebanese Economic Crisis
An engineer in his mid-30s, Maher, explained in the report, how he deposited his hard-earned savings in one of the banks when he returned to the country, believing the money would be safe.
However, due to the informal capital controls imposed by the bank, he ended up losing almost half of what he deposited. Notably, this situation is causing Lebanese to seek every other open option to secure their money, such as gold, real estate, jewelry, and increasingly, Bitcoin, per the report.
Coinfomania had reported a similar Bitcoin catalyst situation with ING Bank users in the Netherlands after the financial institution introduced negative rates.
Lebanese Could Find Freedom in Bitcoin
Bitcoin transactions are peer to peer, and it is not issued or controlled by any financial entity or the government itself. The decentralized nature of cryptocurrencies, in general, promises to provide the freedom of money to users, which has been deprived of many people by several banks.
Cryptocurrencies allow users not only to transact freely but also equally. Meanwhile, most of the Lebanese are somewhat resorting to Bitcoin and other digital currencies, especially as a viable medium to transfer their money in and out of the country.
Mahmoud Dgheim, a Bitcoin trader since 2015, said: “If you want to go around the banking system, bitcoin is a solution.”
Evidently, it could take several years for Bitcoin to achieve such prominence, although evidence shows it has gotten off to an excellent start in Lebanon.