French President Emmanuel Macron recently announced a plan to help safeguard vital public services in crisis-hit Lebanon.
The “financial mechanism” that is being studied will culminate in the creation of a currency board, a monetary authority that would be used to control the fluctuation of the Lebanese pound against the U.S. dollar, according to Annahar.
This authority would ensure that Lebanon continues to provide basic services and goods for its people in case the country faces total collapse amid a continued political vacuum.
It would do so by “stabilizing the exchange rate of the national currency in relation to a foreign currency, the majority of which is in U.S. dollars, by controlling the issuance of the monetary mass on the basis that no local currency is issued without a foreign currency equivalent,” a French official told Annahar.
Through this mechanism, Lebanon’s available foreign currency would be utilized to pay for the Lebanese population’s basic needs, under international financial supervision, in case the country’s leaders failed to form a government, the official explained.
It’s noteworthy that the talk about creating a currency board for Lebanon is not new.
The idea surged in popularity earlier this year when its proponents, most notably American economist Steve H. Hanke, presented it as a quick and effective solution to Lebanon’s currency crisis.
Although a draft law for the adoption of a currency-board system was submitted months ago by MP Paula Yacoubian, no progress has been made in this regard since.