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 1,225,373 checks by August 2022 to 327,135 checks by August 2023. Moreover, the cumulative value of cleared checks in local currency increased remarkably from LBP 22,865B by August 2022 to LBP 41,237B by August 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 $7,436M by August 2022 to $2,590M by August 2023.
Moreover, the volumes of cleared checks in Lebanese Pounds and foreign currencies witnessed significant yearly drops of 61.47% and 86.52% respectively to settle at 249,129 and 78,006 checks, by August 2023. Accordingly, the dollarization rate of checks in terms of volume fell from 47.24% in August 2022 to 23.85% in August 2023.
Notably, the number of returned checks fell substantially by 68.14% YOY to stand at 2,702 checks. Moreover, the value of returned checks in foreign currency increased by 46.52% by August 2023 to reach $148M, additionally the value of returned checks in local currency increased remarkably by 228.57% YOY to reach LBP 506B by August 2023.
Banque du Liban (BDL) recently issued Circular 165, which permits depositors to make payments by check starting from June 1st, 2023, as long as their accounts are in either fresh US dollars or Lebanese lira. To support this initiative, BDL has introduced a new clearing system, distinct from the one dedicated to pre-crisis deposits. This circular serves a dual purpose: it encourages customers to open new accounts in both Lebanese pounds and US dollars, while also aiming to decrease the country’s dependence on cash and stimulate economic recovery. As such, in August 2023, a total number of 177 checks were issued from fresh accounts, of which 36 checks are in USD currency amounting $1.62M and 141 checks are in LBP currency amounting LBP 221B.
Number of Checks by August 2023 (in Thousands)
Source: ABL, BLOMINVEST
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