Original post by: Lara Abdul Malak
Whether the Lebanese want to or don’t want to believe it, whether the Lebanese government and banking sector want to accept it or not, the Lebanese banking industry is dead. No amount of capital raises, no amount of restructuring can bring back the lost trust. Trust is the basis of all activities in society, economy, finance and most importantly politics, and trust is lost in the banking sector for not only the old generations, the current but also future, the youth.
In the 1990s Lebanon was the first country in the region to have cellular or what we call a mobile network, the reason being that the entire landline infrastructure was outdated or destroyed during the war. Lebanon was the first in the Arab region not because they wanted to be the first but because they had no choice but to be the first to jump into the bandwagon of the latest technology, the era of mobility and later on the era of internet.
Today we are at the same cross road. After the fall of the Lebanese banking sector due to their irresponsible lending to the Lebanese corrupt state and government, the Lebanese not only lost their life savings but today have lost whatever was left of their purchasing power in Lebanese Lira.
While in some countries this would still be survivable because they have products and services or manufacturing industries that they themselves own, in Lebanon everything is dependent on raw material, or products from outside, making the economic and social tragedy a 100 times worse.
But maybe the Lebanese have a solution, a chance to not only free themselves from the expiration of the banking sector, the corruption of the state and its political regime but also a chance to help each other in a way like never before.
The answer is in digital currencies. It doesn’t have to be a crypto currency like Bitcoin or Ethereum it could just be a stablecoin like USDC, Tether , Japanese Yen (JPY) , or china’s upcoming digital currency stored in each person’s digital wallet, or with a crypto asset custodian.
So what would that mean for Lebanese and their economy, first and foremost if your money is stored digitally in your pocket, and securely then you could make payments from one digital wallet to another no matter where that other digital wallet was in the world. This would be a savior not only for individuals but also businesses, manufacturers and traders in Lebanon who need to pay for goods and raw material but need to traditionally go through a bank to do it. This is called Peer to peer payments and most of them are carried out on Blockchain public networks. One such company that is doing this for the Lebanese is Fluus.me
Companies such as Global Digital Money for example are even allowing people to hold digital currencies, crypto not only in a digital wallet but in a regular card and giving them the ability to make all payments using those cards at Point of Sales or ATMs within a country or from one country to another.
It would also mean that Lebanese could actually lend money as well, in what is now known as peer to peer lending. So instead of depending on a corrupt government and irresponsible banking sector to lend money to businesses and projects that need funding to grow, expand or operate, or lending money to people who want to buy a house or car. Lebanese could lend to each other using smart contracts on the blockchain with agreed upon interest rates and terms.
Even more so, Lebanese expats who usually send money to their families as remittances wouldn’t even have to worry about using a bank or traditional money payment service provider, they could use blockchain enabled remittance providers like Telcoin , Cwallet, Cashaa, or others.
The Lebanese and international community could even carry out a crowd funding campaigns, on crowd funding platforms or even deal making platforms to build an electrical plant utilizing stablecoins to pay for tokenized shares in this plant and take profits all put into their digital wallets in a transparent, secure, and efficient way.
While the central Bank of Lebanon showed shallow interest in launching a Lebanese digital currency for usage inside Lebanon, or launching the lending trade finance platform for Lebanese industrial sector, nothing happened because nothing ever does. Maybe it would have been better to use Banqu or others already in the space.
These digial currencies, wouldnt need traditional exchanges but Lebanese could use digital and crypto exchanges of which many of them are now being regulated in the region such as CoinMENA, Matrix, RAIN, and many others.
In the final analysis, while death is scary to accept, and what is new is usually even scarier to embrace, the Lebanese need to start to understand that there are solutions out there in the digital age that weren’t available before, and they need to start embracing these new digital forms of money and the freedom as well as responsibility it brings.
The death of the banking sector is inevitable across the globe at some point in the future, and while it has started already in Lebanon this could be seen as an opportunity.. Lebanon and Lebanese have always been the first to embrace opportunities so don’t stop now.