01 The Hour
3,900
Lira to the dollar. April 2020. Reconstructed to the day.
That was the rate written into the circular. A depositor with more than 3,000 dollars in a foreign currency account could ask to take money out in lira at 3,900 to the dollar, up to the equivalent of 5,000 dollars a month, and only at his own request.
The official peg, still in force for critical imports, was 1,507.5. The rate in the street was a third number, and rising.
Whichever of the three applied to a given balance depended on what kind of dollar it was, and that depended on when it had arrived.
02 The Sequence
Oct 2019 Dollars sitting in Lebanese bank accounts on the eve of the crisis became one thing, and dollars transferred in afterwards became another. The first came to be called bank dollars, the second fresh dollars. Neither term appears in any law.
9 Apr 2020 Circular 150 enshrined the inalienability of fresh dollars. Money arriving from abroad after the line was drawn could not be swept into the restricted pool.
Apr 2020 Circular 151 allowed withdrawals from foreign currency accounts in lira at 3,900 to the dollar, up to 5,000 dollars a month, at the client's request. Reporting at the time noted the move widened banking operations away from the peg of 1,507.5, which remained in use for vital imports. Analysts described the circular as an undeclared haircut, costing more than 70 per cent of the market value of the money withdrawn. Accounts of the adoption date differ.
2 Jun 2021 The central bank suspended the decision after the State Council ruled against Circular 151, then rescinded that suspension days later. The rate written into the circular was later set at 8,000 to the dollar.
8 Jun 2021 Circular 158 was adopted, effective a few weeks later. Selected beneficiaries could withdraw 300 or 400 dollars a month in fresh dollars out of accounts opened before 30 October 2019. What had been a bank dollar came out at the value of a fresh one, in monthly instalments, on terms amended repeatedly. The central bank alone sold the dollars to the commercial banks for this purpose, from reserves.
16 Dec 2021 Circular 161 allowed holders of lira accounts to convert and withdraw small amounts in fresh dollars each month at the rate of the central bank's own platform, always below the market rate and above the official one. The gap between the two was about 23 per cent on the first day of application, and just over 15 per cent six months later.
19 Apr 2023 The central bank published a text enshrining the distinction between the two kinds of dollar more directly than the 2020 circulars had done.
31 Dec 2023 Circular 151 expired and Circular 166 replaced it: one account per holder, however many he had and at however many banks, 150 dollars a month up to a total of 4,350, which is twenty-nine payments. Excluded were those already drawing under Circular 158, those whose accounts had seen cheque movements after 31 October 2019, and those who had converted 300,000 dollars or more from lira. More than four years on, no law establishing formal capital controls had been passed.
03 The Hidden Dependency
Nothing in the sequence turns on the identity of the depositor, or on the amount, or on what the money was for. It turns on a date.
Circular 158 is written around accounts opened before 30 October 2019. Circular 166 excludes accounts that saw cheque movements after 31 October 2019. Circular 150 protected money arriving after the line from being treated as though it had been there before.
Two dollars in the same account at the same bank, indistinguishable on the statement, converted at different rates according to the week they were credited. A dollar's price depended on the date it had arrived.
A dollar's price depended on the date it had arrived.
04 What Still Worked
Money Arriving From Abroad
Fresh funds transferred in from outside kept their character. Reporting at the time of the April 2020 measures recorded that the new policy did not apply to them and that they could still be withdrawn in dollars, and a circular of that month made their inalienability explicit.
The Monthly Window
Under Circular 158 a selected depositor could draw 300 or 400 dollars a month in cash out of a restricted account, and the arrangement was extended repeatedly rather than allowed to lapse.
The Lira Counter
The counter went on paying, in the domestic currency, at a rate the circular named rather than the one the market did. Before the lockdown of March 2020 some banks had cut withdrawals to as little as 100 dollars a week; this route replaced that with a stated monthly ceiling and a stated price.
05 Contested
Contested April 2020
The record does not agree on the day the most consequential of these circulars was adopted.
A Beirut newspaper puts the adoption of Circular 151 at 21 April 2020, and a Lebanese policy research centre puts it at 24 April 2020. A wire report of the announcement was filed on Tuesday 21 April. The month is not in doubt, the terms are not in doubt, and the day is given differently in each account. The issue carries all three.
06 The Pattern Library
1 When one retail withdrawal channel closes or fails, demand concentrates on whichever channel is left open, and the capacity of that channel sets what a depositor can obtain.
Observed: Northern Rock 2007, Cyprus 2013, India 2016, Greece 2015, United States 1933, Argentina 2001, Lebanon 2019, Worldpay 2026, TSB 2018, Afghanistan 2021.
2 A currency replacement can require physical modification of each cash dispensing machine before the new notes can be issued, so the machine estate returns to service site by site rather than at once.
Observed: India 2016.
3 Withdrawal limits imposed on a domestic banking system can be written to exempt cards issued outside it, so one machine dispenses under two rules according to where the card was issued.
Observed: Greece 2015.
4 Domestic payment and deposit channels can continue operating while cross-border payment routes fail, with the central bank standing in as the intermediary for payments to and from the country.
Observed: Iceland 2008, Germany 1931.
5 When the institutions that convert payment instruments into cash are closed, wages and checks already received cannot be spent, and merchants and carriers extend their own credit in place of the missing conversion.
Observed: United States 1933.
6 A public employer short of the national currency can pay wages in an instrument it issues itself, which then circulates alongside the currency it stands in for.
Observed: Argentina 2001.
7 Withdrawal restrictions can be imposed by individual institutions and their trade association rather than by statute, so the limit differs from bank to bank and no law governs it.
Observed: Lebanon 2019.
8 A cash withdrawal ceiling set in nominal units has to be raised alongside the note denominations that pay it, because the ceiling can only be dispensed in the notes that exist.
Observed: Zimbabwe 2008.
9 A payment outage can hit card authorisation and merchant funding as separate faults, so acceptance at the terminal is restored while the money owed to the merchant arrives a day late under its own incident notice.
Observed: Worldpay 2026.
10 A retailer that loses electricity can go on trading by taking cash and rationing goods by hand, so the counter outlasts the checkout system that normally prices and settles the basket.
Observed: Texas 2021.
11 A systems migration can leave account records readable but wrong, including presenting one customer's account to another, so a working login is no guarantee that the balance on the screen belongs to the person reading it.
Observed: TSB 2018.
12 The size of a card processing failure can be counted twice, once on first attempts and once after the same card was presented again, and the second count can be about half the first, so part of the recovery runs through the cardholder at the till.
Observed: Visa Europe 2018.
13 A restriction on access to money can be written by purpose as well as by amount, so a balance that cannot be drawn in general becomes payable when it is used for wages, taxes or relief, and the test applied is what the money is for.
Observed: Germany 1931, Brazil 1990.
14 A deposit freeze can be paired with a transferable certificate issued against the frozen balance, so the deposit becomes a claim that can be sold before it is released, at a price the market sets rather than its face value.
Observed: Ecuador 1999, Argentina 2002.
15 A per head issue of a new currency can be distributed through the administration that issues food rations rather than through the banks, so the ration card is the proof of entitlement and the banks are used to collect the old money rather than to pay out the new.
Observed: Germany 1948.
16 When the persons under sanction become the governing institutions of a country, the prohibition reaches ordinary payments that merely touch the state, and access is restored by successive general licences written by activity, so what decides whether a payment can be made is which licence it falls under.
Observed: Afghanistan 2021.
17 One foreign currency held in one banking system can carry two prices at once, according to whether a balance was credited before or after the date the restrictions began, so the older money converts only at a rate the authority names.
Observed: Lebanon 2019.
Changed today: No existing entry gained a case. Entry 1 already carries Lebanon 2019, and this angle concerns the price at which a balance converted rather than which channel was left open. Entry 17 added, on one currency carrying two prices in one banking system according to the date a balance was credited.