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 3,979,043 checks by August 2020 to 2,350,757 checks by August 2021. Moreover, the value of total cleared checks declined yearly by 27.58% to reach $26.12B by August 2021.
In details, the value of checks in LBP dropped by 3.67% year-on-year (YOY) to reach $12,342M, while value of checks in foreign currencies decreased by 40.75% YOY to reach $13,783M by August 2021.
The volumes of cleared checks denominated in Lebanese Pounds and foreign currencies witnessed significant yearly drops of 44.96% and 36.86% to settle at 1,098,300 and 1,252,457 checks, respectively by August 2021.
Accordingly, the dollarization of cleared checks in terms of value went down from last year’s 64.49% to 52.67% by August 2021. In the same token, the dollarization rate of checks in terms of volume rose from last year’s 49.85% to 53.28% by August 2021.
Notably, the number of returned checks fell by a substantial 79.40% YOY to 18,759 checks while the value of the returned checks retreated by 52.70% YOY over the same period to reach $332M by August 2021. However, the decline in returned check cannot be considered as positive indicator, as checks are used less and less to conduct transactions.
No doubts that the market of checks is shrinking due to the fluctuation of the exchange rate in the parallel market and the uncertainty about the banking system. The talks between parliament and BDL regarding the circular 151are not promising as there is no indication that BDL will increase the rate above LBP/USD 3,900. Keeping the rate as is, while the exchange rate in the parallel market is approximately LBP/USD 16000, will leave checks an unattractive instrument to deal with.
Value of Cleared Checks by Currency, by August (in $B)
