Lebanon’s prolonged banking crisis has thrust the nation into a cash‑based economy, exploited for terrorist financing. In February, Kuwait placed eight Lebanese hospitals under anti–terror financing regulations, restricting financial interactions with them.

To curb illicit transactions and improve Lebanon’s reputation, the current cabinet approved the controversial “Gap Law,” which aims to stabilize banks and bring transactions back into the compliant banking system. In a twist that has baffled observers, an alliance of few bankers, anti‑Hezbollah policymakers and media magnates joined forces with Hezbollah to block this law. They favour liquidation of central‑bank gold reserves over the law’s proposed bail‑in.
 
Their argument hinges on Lebanon’s soaring gold price, up about 400 % since the crisis began, which has lifted the country’s holdings from US$11 billion in 2019 to US$45.8 billion as of February 2026. The outbreak of hostilities in March 2026 triggered a market correction that pulled reserves down to US$42.1 billion by March’s end, prompting complaints about missed opportunities to sell at higher prices.
 
LIMS warned that the proceeds from any gold sale would be redirected toward short‑term public expenditure: public sector wages, government led reconstruction programs and questionable public contracts. While repayment of depositors is cited as a justification, LIMS argues that past experience suggests such funds are more likely to be misallocated and channeled to undesired entities and projects, eroding rather than restoring confidence in the financial system.
 
LIMS urges a rapid vote on the gap law in parliament to restore banking activity and curb illicit financing. Delays, to debate gold liquidation for instance, merely prolongs inaction disproportionately hurting smaller depositors and stifling credit growth. A swift resolution is essential to bring transactions back into banks, reduce reliance on cash, thwart illicit financing, and lay the groundwork for recovery. Without a quick banking resolution, Lebanon risks remaining trapped in a low‑growth, cash‑based equilibrium, further exacerbated by ongoing wars and internal instability.

• Between a “Cash” Economy and Selling “Checks”: Lebanese Citizens Outside the Banks’ Umbrella February 3, 2026: Alpheratz Magazine, Article (AR)
• Inclusion of 8 Lebanese Hospitals on Terrorism Lists in Kuwait: What Does the Kuwaiti Decision Mean? February 11, 2026: Annahar, Article (AR)