Currency in circulation
dropped by 31 percent

Stability reached since July

Lira currency in circulation (M0), plunged by LL23 trillion (the equivalent of around $256 million) in 2023, or 31 percent, to stand at LL50.6 trillion ($565 million) at the end of the year. It has stabilized since July 2023 at an average of LL50 trillion, according to Central Bank (BDL) data.

The value of the currency in circulation at the end of last year ($565 million) represents a huge drop from $3.3 billion at the end of 2018 (at the LL1,500 exchange rate).


Source: Central Bank

The M1 money supply, which consists of currency in circulation (M0) and demand deposits in lira, decreased by 13 percent to LL85.4 trillion ($955 million) at the end of 2023. The drop in M1 was less sharp than the decline in currency in circulation due to a 38 percent jump in demand deposits in lira to LL34.8 trillion.

The M2 money supply (M1+ term deposits in lira) fell by 14 percent to LL100.8 trillion ($1.1 billion).

The stabilization of the money supply results from the decision of BDL to stop printing liras and from an improvement in tax collection by the Ministry of Finance. Ghassan Ayache, former Vice Governor at the Central Bank, said that increases in public sector salaries and end-of-service indemnities of public servants could lead to an expansion of the money supply if budget revenues are not increased in parallel.

According to Bank Audi’s Lebanon Economic Report for the fourth quarter of 2023, the correlation between the market exchange rate and the size of the currency in circulation was quite weak over the year 2023.