According to the data published by the Association of Lebanese Banks’ (ABL), the total number of cleared checks in the Lebanese financial system decreased remarkably from 231,909 checks by May 2023 to 92,687 checks by May 2024. However, the cumulative value of cleared checks in local currency increased from LBP 22,667B by May 2023 to LBP 32,076B by May 2024. This upsurge in value of Lebanese checks reflects a larger percentage of discounting Lebanese checks in the market. However, the cumulative value of cleared checks in foreign currency dropped from $1,943M by May 2023 to $681M by May 2024.
Moreover, the volumes of cleared checks in Lebanese Pounds and foreign currencies witnessed substantial yearly drop of 51.51% and 84.35% respectively to settle at 83,274 and 9,413 checks, by May 2024. Accordingly, the dollarization rate of checks in terms of volume fell from 25.94% in May 2023 to 10.16% in May 2024.
Notably, the number of returned checks dropped substantially by 75.23% YOY to stand at 507 checks. Moreover, the value of returned checks in foreign currency decreased by 80.83% by May 2024 to reach $21.47M; additionally, the value of returned checks in local currency decreased by 59.56% YOY to reach LBP 182B in May 2024.
Banque du Liban (BDL) recently issued Circular 165, which permits depositors to make payments by check starting 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 May 2024, the cumulative number of checks issued from fresh accounts reached 8,789, of which 5,840 checks are in USD currency amounting $79.6M and 2,949 checks are in LBP currency amounting LBP 4,673B.
On a monthly basis, a total number of 2,557 fresh checks were issued in May 2024, surpassing the previous month’s figure of 1,915. Notably, the total number of fresh checks is increasing on monthly basis since the introduction of this new clearing system, revealing that there is a growing demand for fresh checks among businesses.
Cleared Checks by May 2024 (in 000s)
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