January 27, 2026
“Lebanon Debate” – Basma Atwi
The proposal to liquefy a portion of gold to return depositors’ money has returned to the forefront again, after it was proposed by more than one party recently, most notably the Minister of Industry, Joe Issa El-Khoury, in his tweet, in which he called for “an agreement to liquefy about $15 billion in gold to buy investment bonds (investment grade zero coupon bond), and give them to depositors whose deposits exceed the value of $100,000, instead of bonds enhanced by potential income on the assets of the Bank of Lebanon.” In reference to the draft financial gap law that was previously agreed upon in the government.
The second proposal came from a member of the Association of Banks, Tanal Al-Sabah (in a television interview), who suggested “liquidating some gold for the rights of depositors, which is one of the assets of the Central Bank.”
These proposals are not new, but rather began since the financial collapse, but their renewal coincides with discussions about the financial gap law, which is met with objection from internal parties and the International Monetary Fund alike.
Historically, the issue was raised for the first time during the era of former President of the Republic, Amin Gemayel, under the pretext of strengthening foreign currency reserves, which had begun to deplete at the time, and supporting the exchange rate of the lira, which had witnessed sweeping collapses. Then it appeared again in the 1990s under the pretext of financing post-war reconstruction projects. It was also raised at the “Paris 2” conference under the pretext of extinguishing part of the public debt. It was raised in 2018 just before the banking and monetary collapse, under the pretext of replenishing the foreign currency reserves at the Bank of Lebanon and avoiding external borrowing to support the balance of payments.
Currently, the value of the gold held by the Bank of Lebanon has reached about 45 billion US dollars, which is its highest value ever, and comes as a reflection of the rise in gold prices in global markets, as a result of the rush of investors, especially global central banks, to enhance their gold assets as a hedge against any disturbances in a world raging with wars and geopolitical fluctuations, in which sanctions are used as a tool to impose policies and subjugate regulations.
The question that arises here: Who truly benefits from the monetization of gold?
The obvious answer is banks, because what they want is either to escape liquidation or to escape recapitalization, in both cases by using public assets such as gold. As for logic, there is no justification for giving up public assets unless it achieves the public interest. Giving it to banks to compensate depositors does not necessarily mean that it will reach depositors, as there is no trust in banks to entrust them with this wealth. Also, the largest percentage of small deposits were erased a long time ago by the various circulars issued by the Bank of Lebanon, and what remains are actually large and medium deposits. Is it reasonable to deprive the Lebanese people of their gold for the sake of these people?
Qanso: Gold is part of the solution and as a sovereign guarantee that rebuilds confidence
Economist Dr. Wajib Qanso believes that “what is being proposed today about liquefying a portion of gold to restore deposits may seem, at first glance, to be a quick solution that calms people’s anger. But from a purely financial-economic perspective, it is a high-cost and risky option if it is misused.”
He explained to Lebanon Debate that “gold is not ordinary liquidity. It is the state’s last sovereign asset, and the last line of defense for what remains of confidence in the financial system. Liquidating it directly means consuming a non-renewable asset in exchange for huge obligations, without addressing the roots of the crisis: a clear financial gap, non-transparent budgets, and responsibilities that have not yet been determined,” stressing that “gold is classified as a non-yielding cash flow-generating sovereign asset (Non-yielding Sovereign). Asset), and its liquidation does not create economic value in itself, but rather replaces a long-term safety stock with a temporary cash flow.”
Qanso believes that “the most rational approach is not based on selling gold, but rather on employing it intelligently, by using it as a guarantee for issuing high-quality, specific-purpose investment tools, linking these tools to clear and measurable time maturities, and subjecting them to a strict legal framework, and independent governance and oversight that prevents the reproduction of the same failure,” warning that “this option remains conditional on a fundamental step that cannot be skipped, which is a comprehensive restructuring of the financial sector and defining responsibilities between the state and the bank.” The Central Bank and banks, before looking into any financing or guarantee formula.”
He concludes: “Gold can be part of the solution, but only as a sovereign guarantee that rebuilds confidence and reduces systemic risks, not as an asset that is consumed to fill a gap created by mismanagement.”
Abu Suleiman: Failure to protect the depositor’s liquidity before maturity will create a market that devours people’s rights
From a technical standpoint, economic expert Walid Abu Suleiman explains to “Lebanon Debate” that “the idea of replacing part of the Bank of Lebanon’s gold with zero bonds may seem guaranteed on paper, but the criterion for success is neither the name of the bond nor its classification, but rather one question: Can the depositor convert his right into fair liquidity when he needs?”
He adds, “The depositor who needs liquidity before maturity will often be forced to sell in a secondary market with poor pricing and liquidity, and here the real haircut appears, not by an official decision, but by a market discount resulting from the pressure of need and the absence of a market maker.”
He concludes: “Any plan that does not protect the depositor’s liquidity before maturity will create a market in which discounts eat up people’s rights, even if the instrument is Investment Grade.”
