Lebanon’s economic collapse extends well beyond the banking sector—it is a systemic crisis. This is the central argument of the 2025 report “It’s a Systemic Crisis!” published by The Leaders Club at Lebanon Opportunities.
The report traces the roots of the collapse to decades of unsustainable fiscal and monetary policies, flawed trade practices, and a deeply interdependent relationship between the State, the Central Bank, and commercial banks. Lebanon’s mounting fiscal and current account deficits went unaddressed, pushing public debt to $85 billion by end-2018—over 150% of GDP. Meanwhile, a worsening trade deficit and declining financial inflows, due to regional instability and strained ties with Gulf countries, drained the central bank’s (BDL) foreign reserves. In response, BDL turned to financial engineering—measures that ultimately worsened systemic losses and triggered the collapse of the lira, the banking sector, and the broader economy. This is the essence of systemic risk: institutional failure that sets off a chain reaction of instability and disruption across the economy.
This article breaks down the report’s findings into five critical dimensions: sector-wide insolvency, loss of confidence, contagion and structural breakdown, failure of the central bank and government, and the absence of a credible resolution or restructuring plan.
For the full report, click on the below link:
Lebanon’s Financial Collapse – A Systemic Crisis Ignored