Gold's Luster Fades as Lebanon's Financial Facade Crumbles
THE ACTORS: Who is involved in this story? Lebanese Political Elite and Central Bank (Banque du Liban): Specifically, former Governor Riad Salameh, who oversaw the pegging of the Lebanese Lira to the US Dollar at an artificially high rate of 1,507.5 LL to $1 for over two decades. His tenure also saw the implementation of several 'financial engineering' schemes. After facing international sanctions
and an Interpol red notice, Salameh's actions are now under scrutiny by European prosecutors (ICIJ, 2023). Commercial Banks: Played a critical role in the 'Ponzi scheme' according to critics, by accepting high-interest deposits from the public, which were then funneled to the central bank. International Monetary Fund (IMF): Has been in discussions with Lebanon on financial recovery plans, often
imposing austerity measures and demanding structural reforms. Lebanese Citizens and Businesses: The primary victims of the crisis, experiencing hyperinflation, bank freezes, and a dramatic loss of purchasing power, particularly those who relied on gold as a store of value. THE FUNDING: Where does their money come from? The central bank’s financial engineering schemes involved soliciting large
deposits from commercial banks, promising exorbitant returns. These returns were often paid from new deposits, creating a classic Ponzi structure. A 2020 report by the Association of Banks in Lebanon revealed that 80% of bank assets were tied up with the central bank (ABL, 2020). Estimates suggest that public debt reached 172% of GDP by the end of 2020, with over $80 billion in losses in the