Lebanon eyes Digital Gold System to Unlock Billions, Stabilize Economy
beirut, Lebanon – Lebanon is exploring a novel financial mechanism – digital tokens backed by its gold reserves – in a bid to inject much-needed liquidity into the crippled banking sector and restore confidence in the nationS economy. The proposed system aims to unlock an estimated $33.1 billion in value without selling the underlying gold, offering a potential pathway out of the country’s devastating financial crisis.
Lebanon’s economic collapse, beginning in late 2019, has seen the Lebanese lira plummet in value, triggering hyperinflation and widespread hardship. Banks have imposed strict capital controls, freezing depositors’ funds and severely restricting access to savings. The country holds an estimated 9.2 million ounces of gold, a strategic asset the government is now looking to leverage through digitization.
the plan involves several key steps: initial issuance of digital symbols representing ownership fractions of the gold; sale of these symbols to investors and banks, generating immediate cash flow; and enabling secondary trading between investors while the central bank retains ownership of the physical gold.
Proponents say the system offers multiple benefits. It woudl enhance financial liquidity by attracting new funds without requiring gold sales, bolster confidence in the banking sector through a stable investment tool, and stimulate economic activity by providing a new financing and exchange mechanism. Crucially, the system preserves Lebanon’s strategic gold reserves, maintaining a hedge against inflation and lira fluctuations.
Furthermore, the digital symbols could be used to meet bank obligations and pay depositors, enhancing financial stability. A 1% issuance commission on transactions is projected to generate at least $331 million in additional revenue.
According to the study outlining the proposal, digital gold symbols represent “Gold-Backed Digital Assets,” providing Lebanon and Lebanese banks a strategic prospect to invest assets without risking the loss of their gold stock or entering direct gold contracts. The initiative aims to position Lebanon as a leader in innovative financial tools, enhancing credit trust and attracting investors while safeguarding the nation’s financial future.
