AM Bank Chairman Marwan Kheireddine acknowledges Lebanon is currently facing challenges. These include addressing how some activists are calling for bankrupting local banks because they are angry that their deposits have been blocked. However, the financial expert doesn’t agree with this idea.
“In Lebanon, like in other developed countries, for example, the United States, there is a deposit guarantee institution that is owned by the state that protects depositors up to 75 million Lebanese pounds, which today is about $3,000,” Marwan Kheireddine says, “So essentially, if you bankrupt the banks, like a lot of activists are saying, out of anger, you actually end up hurting depositors, in that those banks, under liquidation, will never be able to repay the deposits back their fair value.”
In turn, Marwan Kheireddine says each depositor will be guaranteed by the National Deposit Insurance Corporation of Lebanon, an amount that is equal to, or slightly above, $3,000 — and that is a paltry amount compared to the $100 billion currently on deposit with all Lebanese banks, which are owned by all the Lebanese. “So I am totally against bankrupting banks, mainly to ensure that depositors, in the long run, end up getting more of their deposits as opposed to less,” he says.
Food Insecurity Is Also Playing a Role in Lebanon’s Latest Struggles
Lebanon’s burgeoning economic crisis continues to flood headlines across Lebanese news channels. The Russia-Ukraine conflict is also adding fire to Lebanon’s distress, as AP News reports that the country is plagued with food shortages and surging oil and food costs.
Al Jazeera reported last year that nearly 80% of Lebanon is living below the poverty line and many citizens have been surviving on bread and tea. The Arabic media outlet also reports that locals are hoping to fix the broken infrastructure and revive industries again in Lebanon.
A UNICEF survey states that four in 10 Lebanese youth used funds for education to instead purchase basic food, medicine, and other daily necessities — and three in 10 stopped their education altogether.
Ettie Higgins, a UNICEF Lebanon representative also says in a press release that Lebanon’s youth are especially deprived of support. “Investments are needed to ensure that financial concerns do not prevent them from getting the education and skills they need to eventually find decent work and contribute to the stability and prosperity of Lebanon,” she adds.
As the Russia-Ukraine crisis continues to brew, Marwan Kheireddine says its impact on Lebanon, as well as many other countries, is undeniable.
“It’s had a tremendous negative impact on the Lebanese economy, mostly because we import about 85% of our consumable goods, and we’ve been hit by two major world crises, one after the other — COVID being No. 1 — which have impacted us,” Marwan Kheireddine says. “The Ukrainian crisis has increased the price of foodstuffs significantly. Energy prices have increased. Food prices have increased and the fact that there are worldwide shortages has made more people go after a limited number of goods, so it has increased their price. Add all of that to the fact that Lebanon consumes about 85% imported products and it gives you a bad scenario.”
Marwan Kheireddine Explains How Cryptocurrency Could Affect Lebanon’s Future
Marwan Kheireddine says he also sees a path for cryptocurrency to take in Lebanon’s move to improve its economic situation — but one major thing would have to happen. “There’s obviously a role that crypto can play in Lebanon, and the Lebanese have been known to be leaders when it comes to embracing new technological advances and new payment methodologies,” Marwan Kheireddine explains. “However, in my mind, there’s little chance for crypto to take a significant control in Lebanon’s economy, unless Lebanon’s economy opens back up to the world.”
Marwan Kheireddine says Lebanon’s economy is closed off and its government is in default. “We are unable to move funds freely through the financial system, so in my mind, although a lot of the Lebanese deal with crypto, they do not deal with crypto in any impactful form on the local economy,” Marwan Kheireddine says. “It’s essentially dealing in crypto outside the economy. Someone might have a portfolio, they might be in for the profit or they might be in to use a crypto as a payment methodology, but it is not directed at the Lebanese economy or the local economy. Mostly the Lebanese and Lebanon has a huge expat community. There are more Lebanese outside Lebanon than in Lebanon. But in my opinion, to see crypto have an impact on the local economy, the local economy needs to open up to the world first.”
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