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 1,557,226 checks by December 2022 to 434,348 checks by December 2023. Moreover, the cumulative value of cleared checks in local currency increased remarkably from LBP 27,146B by December 2022 to LBP 65,938B by December 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 $10,288M by December 2022 to $3,292M by December 2023.
Moreover, the volumes of cleared checks in Lebanese Pounds and foreign currencies witnessed significant yearly drops of 60.57% and 86.43% respectively to settle at 340,048 and 94,300 checks, by December 2023. Accordingly, the dollarization rate of checks in terms of volume fell from 44.61% in December 2022 to 21.71% in December 2023.
Notably, the number of returned checks fell substantially by 69.62% YOY to stand at 3,363 checks. Moreover, the value of returned checks in foreign currency increased by 13.75% by December 2023 to reach $182M, additionally the value of returned checks in local currency increased remarkably by 176.45% YOY to reach LBP 857B by December 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 December 2023, a total number of 2,395 checks were issued from fresh accounts, of which 1,179 checks are in USD currency amounting $16.107M and 1,216 checks are in LBP currency amounting LBP 2,354B. However, in December alone, number of checks issued from fresh accounts in dollar stood at 484 checks totaling $6,307,857 while number of checks issued from fresh accounts in LBP reached 331 checks amounting LBP 592B.
Number of Checks by December 2023 (in Thousands)
Source: ABL, BLOMINVEST
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