Historical Sketch

In the early 16th, the Ottomans conquered the Levant region from the Mamluk Empire and subsequently created the two provinces of Aleppo and Damascus. During World War I, Great Britain and France occupied the territory and kept it after the Turkish defeat. The French rule was briefly contested by the Hashemite ruler Faisal who proclaimed a short-lived kingdom in Damascus. France quickly regained sovereignty in 1920 and subdivided the area into five constituent states within the Syrian Union. The State of (Greater) Lebanon was carved out in 1924 while the four others were merged into the State of Syria. During the German occupation of France both Syria and Lebanon proclaimed their independence. France recognized independent Lebanon in 1943 and withdrew its troops until end 1946. Between 1975 and 1990 a civil war waged between different militias of the political-religious groups, and until 2005 Syrian troops were stationed in Lebanon. The continued instability has escalated again in 2019 leading to a political and economic decay of the country.

Monetary History Overview

The French took over the Ottoman Bank and reconstituted it as Bank of Syria in January 1919 which began issuing paper money in September of the same year. It became legal tender in May 1920 when the Syrian-Lebanese Pound was created as currency for the French possessions. The Pound was pegged to the French Franc and remained so when France reverted to the gold standard in 1928. In 1924, the government and the then renamed "Bank of Syria and Greater Lebanon" concluded an agreement on a 15 years' concession to act as central bank for the French Levant. Upon expiry the concession, Lebanon and Syria concluded two separate concessions, both for another 25 years' term. The common currency area was thereby dissolved although both Lebanon and Syria had the same issuer, the "Bank of Syria and Lebanon". The Lebanese Pound was now a distinct currency for Lebanon only, the Lebanese banknotes and coins remained legal tender in Syria until February 1948, and vice versa. The Pound's peg to the French Franc remained unchanged until the German occupation of France in 1940 when the Lebanese currency repegged to the Pound Sterling. The anchor currency switched to the US Dollar when Great Britain devalued the Pound in 1949. In 1964, the Bank of Syria and Lebanon's concession expired and did not get renewed, the Bank of Lebanon took over as the country's central bank. In January 1965, the Pound was devalued by almost 30% but remained stable afterwards until the outbreak of the civil war in 1975. The economy gradually declined, and the currency turned into hyperinflation. When a stabilization was finally reached in 1992, the Pound's exchange rate was at about a thousandth of the pre-war value. In December 1998, the Lebanese currency repegged to the US Dollar and has remained so since then. The continued political instability and civil war in neighbouring Syria caused the Lebanese banking system to collapse in early 2020. The Pound's official rate became de facto inoperative as the everyday payment transactions were carried out at a semi-official effective rate that initially settled at around 20% of the official rate but quickly depreciated afterwards.

Lebanon joined the International Monetary Fund (IMF) on 14.04.1947.

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