One of the main entrances to the Banque du Liban (BDL) in Beirut. (Credit: PHB)
In a press release on Wednesday, Banque du Liban (BDL) urged Lebanese banks to register with its new Bloomberg-run foreign exchange platform, which it introduced as the Bloomberg Interbank Matching System.
The BDL’s call signals the start of “necessary preparations and training” that will prepare banks to assume their role as “market makers,” on the new platform, whose framework will be set in circulars soon to be published. A market maker is a player, whether an individual or institution, that buys and sells large quantities of a given asset to ensure liquidity and the smooth functioning of the market.
Besides banks, the most important foreign exchange agents on the market are also expected to plug into the platform. Some banks have already registered, a Lebanese bank executive who requested anonymity told L’Orient-Le Jour.
BDL has not announced the exact date of the platform’s launch or how many banks will sign up for it. Quoting a BDL official, Reuters recently reported that the platform’s launch was delayed due to the war in Gaza and its repercussions on Lebanon.
In the wait for the 2024 budget
According to the above-mentioned banking source, BDL is waiting for the 2024 budget to be passed by parliament (or to be promulgated by a decree, in case it is not voted on before the end of January) as per the Constitution.
“BDL will be able to launch the platform as soon as the budget comes into force, as it provides for going ahead with the unification of the exchange rate,” the source said.
The draft budget law is currently with the Parliamentary Finance Committee, which is finalizing its review and amendments. It provides for several taxes to be adjusted to the current market exchange rate, as part of a process initiated by authorities at the end of 2022.
Since 2019, the Lebanese lira lost 98 percent of its value. Long gone are the days of its being pegged at the rate of LL1,507.5 to the US dollar.
The chairman of the Parliamentary Finance Committee, Ibrahim Kanaan (Free Patriotic Movement), is expected to send the final version of the budget this week to the parliamentary speakership, which will in turn submit it to the plenary assembly for a vote.
The plan to launch a new foreign exchange platform to unify the exchange rate has been in the pipeline long before BDL caretaker Governor Wassim Mansouri succeeded Riad Salameh.
At present, the exchange rate, which is currently about LL90,000 to the dollar, is relayed by informal platforms like Lirarate and Adde Dollar.
BDL has more or less done away with its Sayrafa platform, which gave an intermediate rate aligned with the market, and that the Central Bank modified according to a mechanism it never detailed. The official rate which is still set at LL15,000 to the dollar is destined to disappear.
This article was originally published in French in L'Orient-Le Jour. Translation by Joelle-El Khoury.