Following September’s announcement of the Lebanese authorities regarding replacement of the Sayrafa monetary platform with Bloomberg, Banque du Liban (BDL) has recently urged Lebanese banks to register on its newly introduced Bloomberg Interbank Matching System. This action signals the beginning of preparations and training for banks to take on the role of “market makers.
It is crucial to note that these players ensure liquidity in the market by buying and selling large quantities of cash. The framework for the platform, set to be detailed in upcoming circulars, will also include participation from key foreign exchange agents. While some banks have already registered, the exact launch date and the total number of participating banks remain undisclosed. The platform’s launch was reportedly delayed due to the impact of the Gaza war on Lebanon, and BDL is currently awaiting the passage of the 2024 budget, crucial for unifying the exchange rate, before proceeding. In addition, it is known that BDL has not yet signed the final contract with Bloomberg, while the latter is waiting for the banks to complete the procedures to install the automated system in order to be ready to participate in the platform.
As the Lebanese currency has significantly depreciated since 2019, losing 98% of its value, the proposal aims to establish rules for the transition and create a new electronic foreign exchange platform. Most importantly, the use of Bloomberg platform aims to unify the exchange rate of the Lebanese currency while enhancing transparency, stabilizing the US dollar market, and reducing central bank intervention. Dr. Mansouri, the Acting BDL Governor, advocates a flexible exchange rate, opposes the use of depositors’ funds to pay for government expenditures. The official rate, set at LBP 15,000 to the dollar, is expected to be eliminated. However, uncertainties persist regarding economic stability, inflation crisis, and the platform’s ability to eliminate the parallel market. The effectiveness of the Bloomberg platform in liberalizing exchange rates remains uncertain, raising concerns about Lebanon’s economy and the availability of Forex for essential goods. But, in all likelihood, it is perhaps he right step to regulate and organize the Forex market.