Today, the Lebanese pound suffers from a loss in confidence and soaring velocity. The currency has lost more than 80% of its value and Lebanon’s inflation has reached levels higher than those currently registered in Zimbabwe, Syria, or Sudan. This paper argues for establishing a currency board in Lebanon with the support of a credible international expert on currency board.
The currency board would almost immediately stabilize the Lebanese pound and transform it into a currency with falling velocity able to attract capital seeking arbitrage opportunities. This stability would immediately stop inflation and currency devaluation creating a framework enabling public sector and banking reforms and laying down the foundations for renewed economic growth.