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 3,576,291 checks by July 2020 to 2,158,475 checks by July 2021. Moreover, the value of total cleared checks declined yearly by 25.84% to reach $23.90B by July 2021.
In details, the value of checks in LBP dropped by 2.69% year-on-year (YOY) to reach $11,073M, while value of checks in foreign currencies decreased by 38.48% YOY to reach $12,828M by July 2021.
The volumes of cleared checks denominated in Lebanese Pounds and foreign currencies witnessed significant yearly drops of 44.47% and 34.74% to settle at 1,000,767 and 1,157,708 checks, respectively by July 2021.
Accordingly, the dollarization of cleared checks in terms of value went down from last year’s 64.70% to 53.67% by July 2021. In the same token, the dollarization rate of checks in terms of volume rose from last year’s 49.60% to 53.64% by July 2021.
Notably, the number of returned checks fell by a substantial 80.05% YOY to 17,224 checks while the value of the returned checks retreated by 52.41% YOY over the same period to reach $308M by July 2021. However, the decline in returned check cannot be considered as positive indicator, as checks are used less and less to conduct transactions.
Today, new markets began to be seen by trading Lebanese banker’s checks with cash in Lebanese pounds, in addition to the discounted dollars banker checks that have been traded in the parallel market for a while. By August 2021, a LBP 100,000,000 banker check is worth LBP 90,000,000 in cash. However, this discount is likely to be increased with further restriction on Lebanese pound’s withdrawals. In addition, discounts of bankers ‘checks in dollars to cash dollars are at more than 80%.
Value of Cleared Checks by Currency, by July (in $B)
Source: ABL, BLOMINVEST