Lebanon: Financial Illusion, Monetary Illusion

In order to understand the reasons for the economic and financial tension in Lebanon and to explore the possible issues, it is necessary to consider the functions of financial intermediation in Lebanon both from a theoretical perspective, because they present a extreme case of interweaving banking, fiscal and monetary risks, and from a political angle, because the alternative between their reconfiguration and their preservation is a decisive issue. In Lebanon, the financial system is intrinsically interwoven with the political system, of which it is one of the essential instruments. Its "resilience" is the result of a long political action that takes advantage of society's lack of immunity. Today, Lebanon is facing a major balance of payments crisis and hiding the losses while awaiting an unlikely miracle will only increase them and exhaust the last external assets of the country. It is therefore necessary to allocate losses and risks in a manner that is both socially just, and therefore politically justifiable, and economically oriented towards the restructuring of the economy in such a way that it is no longer structurally dependent on external flows of capital.