The imminent economic collapse in Lebanon which the Lebanese Central Bank Governor has warned of may be averted as Prime Minister Saad Hariri announced his resignation amid the country’s largest protests in 15 years.
These protests were in response to Hariri’s government announcing austerity measures which included a tax on WhatsApp calls. Protesters demanding Hariri’s resignation and widespread demonstrations resulted in the closure of banks across the country in an attempt to prevent a bank run.
This left millions of Lebanese citizens and businesses without access to money which prompted the Governor’s prediction. It is unclear when the banks will open again, as many fear a bank run regardless of Hariri’s resignation. A bank run in Lebanon would echo that of Cyprus in 2013.
Many point to these events as signifying the dawning of the era of cryptocurrencies, as instability and the lack of trust in institutional frameworks triggers widespread demand for alternatives which would offer immunity from political manipulation.
The news of a potential economic collapse was heralded by digital finance enthusiasts as a moment for these assets to shine; millions of individuals face the inability to access their own finances due controls by centrally regulated lenders, which have rendered individuals’ finances practically non-existent.
By employing digital assets based on a commonly shared and transparent ledger, users can access their own finances when they need to, free from government manipulation. Commentators noted an increase in the use of bitcoin as a result of this crisis, however bitcoin has its own problems. Bitcoin is a notably volatile digital asset which may dissuade users in countries like Lebanon from accessing it.
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In recent years, stablecoins have been developed to provide an increased level of stability, however many of these are tethered to fiat currencies which face their own volatility, as is evident in Lebanon. These issues have resulted in the development of the Anchor stablecoin (ANCT) by Anchor AG, a financial services company based in Zug, Switzerland.
Anchor is an algorithmic stablecoin pegged to global economic growth. Unlike most major fiat currencies which tend to depreciate, global GDP has expanded from $1.3 to $80.7 trillion since the 1960s, indicating a sustainable index that offers long-term price stability and steady appreciation over time.
Lebanon is poised to experience further political uncertainty amid Hariri’s resignation. While the situation develops, questions will continue to be raised about the country’s economic future, which may lead the Lebanese government to securing a viable solution, such as adopting a stable and decentralized digital financial product as their sovereign currency.
