The Dollarization Of The Lebanese Pound
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Since the 2019 financial collapse, Lebanon has undergone an unprecedented monetary shift characterized by the rapid depreciation of the Lebanese Pound (LBP) and a pervasive transition toward a dollarized economy. This study utilizes a qualitative research methodology and descriptive economic analysis to investigate whether this movement—defined by the adoption of the US Dollar for pricing, wages, and savings—reflects a temporary adjustment to hyperinflation or a permanent structural transformation. By reviewing market behaviors, banking sector constraints, and inflationary trends, the research identifies a clear erosion of confidence in national financial institutions. Findings reveal that while dollarization acted as a market-driven stabilization mechanism allowing economic continuity, it has simultaneously weakened monetary policy efficacy and exacerbated social inequalities between "dollar-earners" and "pound-earners." The study concludes that the persistence of dollar-based pricing and hybrid wage systems suggests a long-term structural shift. Reversing this trend would require not only currency stabilization but also deep-rooted institutional reforms and a restoration of trust in the Lebanese banking sector.
Keywords
Currency depreciation, Dollarization, Economic Sovereignty, Financial Stability, Hyperinflation, Lebanese Pound (LBP), Lebanon Financial Crisis, Market Behavior, Monetary policy