Banking confidence, exchange rate are key to Lebanese recovery, says banker

Banking confidence, exchange rate are key to Lebanese recovery, says banker

Lebanon's short-term priority in addressing its economic crisis should be to enact measures that restore confidence in the banking system and the exchange rate, according to Sarah Hadchiti, a research analyst at Blominvest Bank.

The banking system, paralysed by the worst financial crisis in Lebanon's history, faces major structural and operational challenges.

Lebanon central bank governor Riad Salameh warned on August 27 that banks that cannot increase their capital by 20 percent by the end of February 2021 will have to get out of the market.

Speaking to Arabian Business, Hadchiti (pictured below) said: "It's wise to recall that, based on various country experiences, exchange rate crises don't necessarily lead to banking crises, but all banking crises lead to exchange rate crises.”

Lebanese banks have frozen savers out of their dollar deposits and largely