Lebanon's dash for cash: Demand for hard currency doubles over seven years

Published September 7th, 2016 - 08:00 GMT
Nearly 30 percent of the assets of banks in Lebanon are in cash. (File photo)
Nearly 30 percent of the assets of banks in Lebanon are in cash. (File photo)

Lebanon's Central Bank Governor Riad Salameh said Tuesday that the demand for cash in Lebanon has more than doubled over the past seven years.

“Lebanon has been witnessing a higher demand for cash. In the last seven years this demand has almost doubled to reach the equivalent of around $3.3 billion by end-August 2016,” the governor told participants in the third Mint and Print conference organized by the Central Bank of Lebanon.

But the governor didn’t say if the demand for cash was mainly in foreign currency or Lebanese lira.

Salameh stressed that cash remains one of the last resources in times of financial crisis.

“Despite the restrictions imposed by many countries to reduce the use of cash so as to fight money laundering and tax evasion, cash remains a last resort in times of crisis such as the 2008 crisis, times of war, times of negative interest rates,” he added.

Nearly 30 percent of the assets of banks in Lebanon are in cash.

The Central Bank has also beefed up its foreign currency reserves to weather any possible financial crisis in the future. Bank Audi has estimated the Central Bank’s foreign currency at over $40 billion, the highest in the country’s history.

“[The Central Bank], like other central banks, is encouraging alternative payment systems. However, all central banks know the importance of cash for the economy. We also know that the seigniorage we derive from it is an important income for us,” Salameh said.

“This strong demand for currency all over the world has also been accompanied by new innovations launched by the industry in order to ensure better security features and higher durability,” he added.

Salameh said that cash has been an efficient and reliable means of payment for many decades, and the demand for cash has been increasing annually all over the world.

 

 

 

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