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Sayrafa, the Banque du Liban (BDL) platform whose restructuring was officially approved by Cabinet last Thursday, represents a significant step on the long road towards crisis resolution. However, it is important to understand that it cannot address all of the country’s challenges alone. Much work remains to be done to restore stability to the domestic exchange market and mitigate the erratic fluctuations of the Lebanese pound against the US dollar.
The new version of the Banque du Liban (BDL) platform is integrated with Bloomberg. This integration revolves around an electronic trading platform, Sayrafa, designed specifically for Lebanon. It provides financial market professionals with the ability to access currency markets and trade currencies, all while using the functionalities and data provided by the Bloomberg system.
Bloomberg is a widely used multifunctional computer system within the financial industry, renowned for its data management, market analysis and provision of “real-time” financial information. Its “real-time” data capabilities play a pivotal role in revealing the identity of traders and the amount of each transaction, thereby ensuring transparency in Lebanon’s domestic foreign exchange market.
Theoretically, the platform ought to enable the tracking of Lebanon’s monthly import volume, which stands at one billion six hundred thousand dollars. This transparency serves as tangible evidence of Lebanon’s compliance with international organizations in the fight against money laundering and terrorism financing.
The global financial system
The increased transparency achieved through the integration of Sayrafa with Bloomberg is just one of its advantages. It is this interconnectedness that enables Lebanon to reconnect with the global financial system.
Therefore, the dollar-to-pound rate established on this platform becomes the real and official rate for Lebanon on a global scale. This will help the country achieve its goal of unifying the dollar/pound exchange rate. However, the unification of this rate will eventually contribute to addressing the issue faced by depositors, who are currently bearing the brunt of multiple dollar/LBP exchange rates. This clearly requires concerted efforts and coordination across the government, the BDL and the banks.
The likelihood of success for Sayrafa
The Sayrafa-Bloomberg operational mechanism will be based on the principle of supply and demand, with banks and money changers serving as facilitators for these dynamics. The success of the platform will depend on the ability of these two actors to attract US dollar purchasing and selling operators, as interim BDL Governor Wissam Mansouri has promised that the reserves will remain untouchable.
BDL’s intervention
Ghassan Ayache, former Deputy Governor of BDL, has a resolute perspective on this matter. He posits that it is highly unlikely for the Central Bank to maintain a neutral stance, which implies that it will refrain from intervening in the foreign exchange market when a surge in US dollar demand arises due to internal, external or combined factors. Ayache warns that “such neutrality will inevitably lead to volatile and dramatic fluctuations in the dollar’s value relative to the Lebanese pound.” He added that “when faced with such circumstances, the bank would be forced to tap into its foreign currency reserves, even if only to a limited extent.”
According to Mansouri, it is imperative to dispel any misconceptions about Sayrafa-Bloomberg’s capacity to stem the depreciation of the national currency. This depreciation is closely linked to a budget deficit, a trade balance deficit, a balance-of-payments deficit and a glaring structural imbalance in the national economy, a fact that is evident to all.
Jassem Ajjaka, an economic and financial expert, posits that the revamped Sayrafa platform will not be able to stem the escalating value of the national currency as long as a cash-driven economy continues to dominate the country and its permeable borders remain unchecked. In light of these circumstances, it seems unlikely that the black market will be eradicated. Those involved with illicit funds will never resort to Sayrafa-Bloomberg.
