Why are banks resuming their strike on Tuesday?

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Lebanese banks have decided to resume their strike starting next Tuesday while keeping ATMs and international transfers to merchants open in order to secure imports.

This decision comes after BankMed was required to pay a depositor's dollar deposit in cash instead of a bank check, which sparked outrage among banks.

Despite the opposition of the caretaker Prime Minister, Najib Mikati, and the Governor of the Central Bank of Lebanon, Riad Salameh, consultations among banks led to the decision to resume the strike.

The Association of Banks issued a statement that referred to judicial decisions that weigh on different scales. Banks are required to accept debt repayments in foreign currency by bank checks drawn on the Central Bank of Lebanon, or in Lebanese pounds at an exchange rate of 1,500 pounds per dollar.

Additionally, banks are required to repay or transfer foreign currency deposits in cash and in the same currency for the benefit of some depositors on the account of other depositors.

The statement noted that these judicial decisions obliged banks, which had lent the private sector approximately 40 billion dollars, to receive over 30 billion dollars in checks drawn on the Central Bank of Lebanon or in Lebanese pounds at an exchange rate of 1,500 pounds per dollar. The judicial decisions did not realize that they were thereby reducing depositors' chances of recovering their foreign currency deposits and even eliminating them.

The banks stressed that it has become urgently necessary for the official authorities, including executive, monetary, judicial, and legislative bodies, to assume their responsibility by finding a comprehensive solution to the systemic crisis. This can be achieved by issuing general and binding rules that apply to everyone, not just specific or all banks, but also to the entire financial sector and even depositors.

The resumption of the strike by Lebanese banks will likely have an impact on the already fragile economy, exacerbating the shortage of liquidity and further delaying the recovery of the country from its economic crisis.