As per the data published by the Association of Lebanese Banks’ (ABL), the total number of cleared checks in the Lebanese financial system slumped from 2,496,338 checks by May 2020 to 1,550,236 checks by May 2021. Moreover, the value of total cleared checks declined yearly by 21.56% to reach $16.93B by May 2021.
In details, the value of checks in LBP dropped by 3.45% year-on-year (YOY) to reach $7,481M, while value of checks in foreign currencies decreased by 31.70% YOY to reach $9,456M by May 2021.
The volumes of cleared checks denominated in Lebanese Pounds and foreign currencies witnessed significant yearly drops of 44.73% and 30.77% to settle at 704,619 checks and 845,617 checks, respectively by May 2021.
Accordingly, the dollarization of cleared checks in terms of value went down from last year’s 64.88% to 55.83% by May 2021. However, the dollarization rate of checks in terms of volume rose from last year’s 48.93% to 54.55% by May 2021.
Notably, the number of returned checks fell by a substantial 81.68% YOY to 13,101 checks while the value of the returned checks retreated by 52.02% YOY over the same period to reach $229M by May 2021. However, the decline in returned check cannot be considered as positive indicator, as checks are used less and less to conduct transactions.
Undoubtedly, the slump in total volume of checks is due partly to the shift to a cash-based economy as merchants are likely insisting on cash payments for merchandise, and as the real estate activity has considerably slow down. Consequently, cash dollar is being increasingly king in Lebanon’s spattering economy.
Value of Cleared Checks by Currency, by May (in $B)
Source: BDL, BLOMINVEST