According to the data published by the Association of Lebanese Banks’ (ABL), the total number of cleared checks in the Lebanese financial system slumped from 1,123,318 checks by July 2022 to 298,043 checks by July 2023. Moreover, the cumulative value of cleared checks in local currency increased remarkably from LBP 19,142B by July 2022 to LBP 36,174B by July 2023. This upsurge is driven by a significant increase in value of Lebanese checks which reflects a larger percentage of discounting Lebanese checks in the market. Meanwhile, the cumulative value of cleared checks in foreign currency fell from $6,649M by July 2022 to $2,402M by July 2023.
Moreover, the volumes of cleared checks in Lebanese Pounds and foreign currencies witnessed significant yearly drops of 61.6% and 86.43% respectively to settle at 225,145 and 72,898 checks, by July 2023. Accordingly, the dollarization rate of checks in terms of volume fell from 47.81% in July 2022 to 24.46% in July 2023.
Notably, the number of returned checks fell substantially by 67.35% YOY to stand at 2,532 checks. Moreover, the value of returned checks in foreign currency increased by 60.87% by July 2023 to reach $148M, additionally the value of returned checks in local currency increased remarkably by 277.61% YOY to reach LBP 506B by July 2023.
Banque du Liban (BDL) has released a new circular with number 165, allowing depositors, effectively June 1st, 2023 to pay by check from their account, provided the account is in fresh US dollars or Lebanese lira. To facilitate these transactions, BDL established a new clearing system, separate from the existing one reserved for deposits held in the bank before the crisis. Indeed, the circular serves on one hand, to encourage customers to open new accounts in both Lebanese pound and US dollars and on the other hand, to reduce reliance on cash in the country and revive the economy. As such, in July 2023, a total number of 33 checks were issued from fresh accounts, of which 5 checks are in USD currency amounting $25,506 and 28 checks are in LBP currency amounting LBP 7B. Nonetheless, 3 USD checks were returned amounting $3,760.
Number of Checks by July 2023 (in Thousands)
Source: ABL, BLOMINVEST
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