A new attempt to resolve Lebanon’s long-running deposit crisis is quietly taking shape inside the Banque du Liban (BDL), with Governor Karim Souaid personally leading the effort, according to banking sources cited by Nidaa Al-Watan newspaper. 

The plan focuses on a series of measures aimed primarily at addressing the deposit backlog, including a new approach to “post-crisis” deposits that would allow the BDL to shrink total deposits by about $25 billion.

At its core is a long-discussed measure: paying $100,000 to every depositor who meets eligibility requirements. The new element, according to the daily, is that these payouts would be made within a single year. The move would inject up to $4 billion into the economy in one go, potentially delivering a significant boost to activity.

The most innovative part of the plan targets deposits that do not meet eligibility criteria, meaning funds created or transferred into the banking system after October 17, 2019, when Lebanon’s financial meltdown began. These are estimated at $55 billion of the $83 billion total, much of it generated through the exchange of bank checks between depositors and lenders.

The central bank has compiled extensive data on check movements since the start of the crisis, enabling it to create a table tracking the market value of each check for every month over the past 60 months. This allows BDL to determine the real market value of any bank check when it entered its clearing system, either upon deposit or encashment.

Using this information, the bank would offer depositors two options: withdraw their funds at actual market value within a short time frame, or keep the full nominal amount with no set payment date.

To encourage participation, BDL plans to set a minimum payout of 20% of the nominal value for deposits based on bank checks. The percentage could rise if the table shows the check was worth more at the time. The central bank argues the rate is fair, preventing depositors from exploiting banks or BDL, as they were aware check values had sharply depreciated during the crisis.

This approach, according to BDL estimates, would reduce total liabilities — deposits — by around $25 billion, bringing the figure down to roughly $58 billion.

Central bank Governor Souaid also plans to launch talks with commercial banks to cut interest earnings they have received from placing funds at BDL, in a bid to make the plan financially viable.

Supporters say the plan’s key advantage is that it avoids bank bankruptcies while allowing each lender to clearly assess what it owes to, and is owed by, the central bank, helping chart a repayment path for depositors. Another advantage is that it remains confined within the financial sector, without drawing on state resources or assets.

Banking sources say Souaid decided to move forward after concluding that political authorities were neither willing nor able to implement reforms. They note that in the past six years, parliament has not passed a single law to advance the sector or resolve the crisis, relying instead on circulars issued by former governor Riad Salameh, which remain in effect.

If implemented, the plan would shrink the financial gap from $83 billion to between $50 billion and $55 billion. With BDL holding about $40 billion in reserves, gold and other assets, the shortfall could be cut to around $15 billion; a level banking experts view as manageable for restructuring, assigning responsibilities, and dividing remaining losses.