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 1,399,559 checks by October 2022 to 384,251 checks by October 2023. Moreover, the cumulative value of cleared checks in local currency increased remarkably from LBP 20,458B by October 2022 to LBP 54,497B by October 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 $8,944M by October 2022 to $3,003M by October 2023.
Moreover, the volumes of cleared checks in Lebanese Pounds and foreign currencies witnessed significant yearly drops of 60.79% and 86.4% respectively to settle at 296,856 and 87,395 checks, by October 2023. Accordingly, the dollarization rate of checks in terms of volume fell from 45.91% in October 2022 to 22.74% in October 2023.
Notably, the number of returned checks fell substantially by 67.97% YOY to stand at 3,105 checks. Moreover, the value of returned checks in foreign currency increased by 38.89% by October 2023 to reach $175M, additionally the value of returned checks in local currency increased remarkably by 228.96% YOY to reach LBP 727B by October 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 October 2023, a total number of 961 checks were issued from fresh accounts, of which 351 checks are in USD currency amounting $5.65M and 610 checks are in LBP currency amounting LBP 1,012B. However, in October alone, number of checks issued from fresh accounts in dollar stood at 223 checks totaling $3,117,635 while number of checks issued from fresh accounts in LBP reached 274 checks amounting LBP 511B.
Number of Checks by October 2023 (in Thousands)
Source: ABL, BLOMINVEST
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