With deposits flowing in unabated, banks in Lebanon find themselves in an almost singular global position — they have an overabundance of liquidity. “We definitely have an excess,” said Marwan Barakat, head of research at Bank Audi. “But this liquidity pays in difficult times, such as [those] we are passing through nowadays. Excessive liquidity has been paying for Lebanon.” The Central Bank of Lebanon reported $14 billion in capital inflows for the first eight months of 2009, though some analysts contest this number. Bank Audi estimated that $5 billion of this amount were converted into Lebanese lira (LL) during the first half of 2009, gaining on the $8 billion worth of conversions for the whole of 2008. Though total liquidity is not at its record high, it is the massive conversions into LL that have created an excess of liquidity in local currency, which could, eventually, become a burden if
