The Evolution of Lebanon’s Monetary System

This report traces Lebanon’s rise as a regional financial center during the 1940s and 1950s, from joining the sterling area in 1941 to separating the Lebanese lira from the Syrian lira in 1948 and fixing its value against the dollar.

It explains how liberal economic policy and the 1956 banking-secrecy law drew Arab and foreign capital to Beirut, increasing the number of banks from 14 to more than 40. The lack of supervision nevertheless exposed the system’s fragility during the crises of 1956 and 1958. The report concludes with the start of financial reform under President Fouad Chehab and the creation of the Money and Credit Council in 1959, paving the way for Banque du Liban.