Restoring Liquidity and Confidence in Lebanon’s Financial System: A Market-Led Approach

The article “Revitalizing the Financial System: A pragmatic approach to market-based solution beyond politics,” published in Lebanon Opportunities (Autumn 2025), authors Riad Obegi and Claude Khayat of Banque Bemo confront Lebanon’s severe and prolonged financial collapse by outlining both the roots of the crisis and a concrete, market-driven proposal to address it. The authors argue that the status quo – marked by frozen deposits, structural imbalances, and the near-absence of credit – is not only unsustainable but also economically destructive. They emphasize that depositors’ confidence has collapsed, banks can no longer support economic activity, and an overwhelming shift to the cash economy has further weakened the formal financial sector. Despite years of discussion, political debates, and temporary mechanisms, no practical solution has emerged to restore bank functionality or revive liquidity. As a result, the authors insist that Lebanon cannot wait for a political consensus or for external institutions to provide an all-encompassing solution.

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