In Lebanon, banks will remain closed until further notice, according to the country’s Association of Banks.
Crisis hits Lebanon’s banks
Macroeconomic uncertainties, skyrocketing inflation and a widespread economic crisis have prompted Lebanon’s banks to close their doors.
CZ, the CEO of Binance, also wanted to report the news in a tweet:
Banks in Lebanon closed until further notice.https://t.co/ssa8jVjtvV
— CZ 🔶 Binance (@cz_binance) September 21, 2022
The decision was made following a series of robberies last week. The cause is linked to a general discontent that has spread among depositors, who have been blocked from accessing funds.
In fact, banks have reportedly decided to suspend this type of operation due to the excessive economic crisis that is affecting the country.
According to a statement issued by the Association of Banks in Lebanon (ABL), the closure period is indefinite and will be so until further notice.
Within the statement, the ABL says it is concerned about the risks that continue to aggravate the situation of employees and customers in the sector.
A climate of “incitement to violence” is also mentioned, which is not being curbed or contained in any way. In part, this situation is blamed on a complete absence of concrete measures and interventions by the authorities to strengthen security and vigilance in the physical locations of the branches.
The current situation the country is facing
In short, it is certainly not one of the best scenarios. The context is somewhat reminiscent of the bank run that occurred during the 2008 crisis.
At a time of complete uncertainty and no economic security, the decision to block access to funds may not be the right one.
For sure, banks are protecting their capital from a potential total outflow of money.
Depositors, however, feel attacked and cornered, and this could spread further panic.
Unfortunately, such a scenario could have escalating implications, and the robberies that have occurred during the past few days could be just the beginning.
George al-Hajj, president of the Federation of Bank Employees, revealed:
“There is nothing new about the plan announced last Friday by the Ministry of Interior and Municipalities. The banking services maintained during this week’s closures will continue in event of prolonged closure.”
Among the services mentioned by George al-Hajj are ATM withdrawals and other online banking applications.
Further fueling the general discontent is a report that some politicians and bank executives have moved their funds out of the country.
The classic injustice where the rich win, while the weaker and less protected portion is left to bear the brunt of the problem and pay the consequences.
The International Monetary Fund (IMF), after visiting the country last Tuesday, spoke of restructuring the banking sector, calling it a necessary pre-requisite for Lebanon to receive financial support.