| 2 December 2023, Saturday |

Lebanon’s central bank to phase out Sayrafa exchange platform

Lebanon’s central bank will decommission the controversial exchange platform known as Sayrafa after governor Riad Salameh’s 30-year tenure ends this month, one of the institution’s vice governors told Reuters on Monday.

Salim Chahine said the bank’s leadership was talking with government and parliament policymakers, as well as the International Monetary Fund, about the need to move away from the platform given its lack of transparency and governance.

“It’s about the way Sayrafa will be phased out,” he said.

The exchange platform was set up in May 2021, 18 months into Lebanon’s economic meltdown. It was widely recognised as a way for the central bank, also known as BdL, to stabilize the Lebanese pound, which nevertheless continued to decline.

Lebanese authorities and international institutions criticized Sayrafa for its lack of transparency, unsustainability and the opportunity it created for arbitrage, particularly as the gap grew between Sayrafa’s and the parallel market.

Chahine said the platform would be replaced by an “exchange rate determination electronic platform” set up through international providers.

“We are in advanced discussion to select between Refinitiv or Bloomberg,” he said.

“The Sayrafa exchange platform, BdL’s primary monetary tool for stabilizing the LBP, is not only an unfavorable monetary tool, but has also morphed into a mechanism to generate arbitrage profits,” the World Bank said in its spring 2023 economic monitor, saying buy-side Sayrafa participants may have made as much as $2.5 billion through arbitrage trades.

The World Bank described it as one of the “weak, and often counterproductive, policies implemented by the Lebanese authorities since the outbreak of the crisis.”

  • Reuters