Across a series of media appearances, LIMS has argued that Lebanon’s recovery hinges on two mutually reinforcing pillars: the financial gap law to resolve the legacy losses of the banking system, and the adoption of a formal currency board to anchor expectations and attract fresh capital. The former would clean up bank balance sheets. The latter would encourage capital to flow back into the system, rebuild deposits and allow lending to resume. While the gap law addresses the past, a currency board is designed to secure future growth. Together, they would restore credit, investment and economic activity, while rebuilding confidence in the banking system and in Lebanon among households hoarding cash, the Lebanese diaspora and foreign investors.
In practice, the central bank has already moved some distance in this direction. Monetary policy has become more disciplined, though informal, incomplete and lacking a legal framework. The current monetary arrangement has begun to resemble a de facto currency board, helping to stabilise the Lebanese pound and improve the balance of payments. By completing the final step and formally moving to an official currency board, Lebanon would send a clear signal to investors and the international community that money in Lebanon is safe, perhaps for the first time in decades.
In 2025, Lebanon recorded a large cumulative balance-of-payments surplus, reaching nearly $13.9bn by October, a sharp increase on the previous year. While this was essentially driven by the revaluation of the central bank’s gold holdings, LIMS notes that even excluding gold, the surplus still amounted to roughly $1.2bn–$2bn, indicating genuine net capital inflows. Sustaining and expanding these inflows requires a formal currency board to restore confidence in the banking sector, the main conduit for capital.
On another hand, the presence of a balance-of-payments surplus despite a large trade deficit, LIMS argues, undermines a long-standing narrative that currency depreciation is primarily the result of excessive imports. On this basis, LIMS has warned that protectionist tariffs and import restrictions, introduced to curb imports, rest on a flawed diagnosis and risk entrenching stagnation rather than stabilising the economy. For years, the trade deficit has been framed as the problem, fuelling repeated calls for protectionism. The recent data, LIMS argues, suggest that this framing no longer holds, and reveals that the mains reason of BOP deficit in expansionary monetary policy. A currency board, not trade repression, drives external stability, and without this formal anchor the gains in the balance of payments risk being reversed.
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