You think everything is stable, secure, reliable and resilient, and then suddenly it isn’t. Does this sound far-fetched? Well, it’s not. It could happen anywhere.
I’ve been lucky enough to be in mostly positive worlds, where governments have ruled well and inflation has been mainly in control. These days, everything is a bit more up for grabs and questionable, but it varies. If I was in a country where the government has lost it, what would happen?
Well, let’s take a country where the government has lost it: Lebanon.
I was lucky enough to be a guest there a few years ago and, being honest, thought it was an amazing country. Its history is amazing and the fact that they welcomed a million Syrian migrants after the war is immense. It’s a shame that we talk about Ukrainians and their war with Russia, but no one mentioned how the Lebanese had welcomed Syrians.
I toured the country a little bit, and was blown away by Baalbek, an ancient Roman site that has this amazing temple which, even today, no one knows how they built it.
The country is beautiful and yet, in many minds, we probably think of it as a country torn apart by religion and war. I said to my guide that the West has this view and he replied: “yes, but that is because we are Muslim and, even though we are Muslim, we have many versions of this religion so that we can find a fight with each other”.
That line has stayed with me forever.
The last time I thought about Lebanon was when there was that massive explosion in the port.
A country already on its knees sunk further. What do you feel about that? What do I feel about that?
I feel we should care.
Obviously, you cannot care about everyone, everywhere, but when I read this latest report, I was shocked to see it.
When you enter a crisis, the last thing you expect is to find the bank robber is the bank.
- Lebanon has been reeling from a worsening economic meltdown since 2019, plunging 80 percent of its population – about three million people – below the poverty line, according to the United Nations.
- Poverty and unemployment have soared, and savings-account values have evaporated, along with the country’s middle class.
- Since 2019, Lebanese banks gradually imposed draconian controls on deposits, effectively locking millions of customers out of their foreign currency savings.
- “Every time you want to withdraw money, it would be at a rate much lower than the market value,” said Al Jazeera’s Zeina Khodr. “For example, if you want to withdraw $700, they gave you $200. So that’s a de facto haircut.”
- A haircut in economic terms means a reduction applied to the value of an asset. In this case, it refers to the banks’ absurdly unfavourable exchange rate in Lebanese pound when people try to withdraw cash.
But the bottom-line in Lebanon is that people have to rob their own bank to get their own money.
In case you cannot see this, here’s the story:
A woman brandishing a toy pistol, broke into a Beirut bank branch to retrieve her trapped savings … around an hour later, she left with $13,000 in cash … the woman was identified as Sally Hafez by her mother, who told a local Lebanese television station that Hafez took money from her own account to treat her younger sister who has cancer. “If we hadn't done this, my daughter could have died”, her mother ]said].
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...