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 1,306,237 checks by September 2022 to 353,183 checks by September 2023. Moreover, the cumulative value of cleared checks in local currency increased remarkably from LBP 25,682B by September 2022 to LBP 45,699B by September 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 $8,003M by September 2022 to $2,848M by September 2023.
Moreover, the volumes of cleared checks in Lebanese Pounds and foreign currencies witnessed significant yearly drops of 61.20% and 82.34% respectively to settle at 270,839 and 82,344 checks, by September 2023. Accordingly, the dollarization rate of checks in terms of volume fell from 46.56% in September 2022 to 23.31% in September 2023.
Notably, the number of returned checks fell substantially by 67.66% YOY to stand at 2,916 checks. Moreover, the value of returned checks in foreign currency increased by 61.11% by September 2023 to reach $174M, additionally the value of returned checks in local currency increased remarkably by 277.14% YOY to reach LBP 660B by September 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, by September 2023, a total number of 464 checks were issued from fresh accounts, of which 128 checks are in USD currency amounting $2.53M and 336 checks are in LBP currency amounting LBP 501B. However, in September stand alone, number of checks issued from fresh accounts in dollar stood at 87 checks totaling $883.13M while number of checks issued from fresh accounts in LBP reached 167 checks amounting LBP 273B.
Number of Checks by September 2023 (in Thousands)
Source: ABL, BLOMINVEST
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