Lebanon devalues its currency by 90%, Snowden thinks Bitcoin will fix this
Lebanon adopts a new official exchange rate, devaluing its local currency by nearly 90%. The new exchange rate is set at 15,000 Lebanese pounds to the US dollar, according to a Jan. 31 report, which cited a statement from the country’s central bank governor, Riad Salameh.
This marks a significant shift from the old rate of 1,507 Lebanese pounds per dollar. The official Lebanese currency has been pegged to the dollar at that rate since 1997.
Salameh tired that commercial banks in Lebanon “will see the part of their equity denominated in sterling reduced” when the new official exchange rate is implemented. He added that to stem the impact of the new development, banks would have five years “to reconstruct the losses due to the devaluation.”
Lebanon’s economic problems
The Lebanese pound began to devalue in 2019 due to the country’s years of great economic crisis and the likelihood that the government will default on maturing national debt obligations.
In an effort to tackle the country’s crippling financial crisis, Lebanese banks restricted ordinary citizens from freely accessing their dollar savings, but the move worsened the situation.
The decision to devalue the currency is in line with a draft agreement reached with the International Monetary Fund (IMF) last year that could enable the country to receive a bailout from the organization to tackle the financial crisis. However, the change is not expected to solve one of the most crucial aspects of the situation – restricting citizens from accessing their dollar savings.
Can Bitcoin fix this?
While the IMF has offered a bailout by forcing the West Asian country to devalue its official currency to solve the liquidity crisis, bitcoin (BTC) could have offered a better solution by providing some protection for currency devaluation and liquidity. This is what the popular whistleblower and BTC campaigner – Edward Snowden – hinted at earlier.
Bitcoin has a limited supply of just 21 million units, with more than 90% of the maximum supply already in circulation. Because of the limited supply, Lebanese don’t have to wake up to news like their government devaluing BTC.
Also, due to its decentralized nature, bitcoin can bring foreign currency to cash-strapped Lebanese looking for alternative banking solutions without going through a financial institution.
