BDL considering launching digital currency. Move to be preceded by enhancement of cybercrime protection - Lebanon

BDL considering
launching digital currency
Move to be preceded by

enhancement of cybercrime protection

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The Central Bank (BDL) is considering issuing a digital currency in the coming years that will be under its own supervision, said Governor Riad Salameh.

The digital currency will play a key role in the future, but BDL must first carry out some necessary measures, especially developing means for protection against cybercrimes, Salameh said. The Special Investigation Commission and the Banking Control Commission have teamed up to create a system to prevent these crimes, he said.

Digital currency transfers are less costly than bank transfers, but they are only used in a few transactions, such as online buying.

Information technology and cyber security consultant Jacques Bakaev said that launching a digital currency takes time and should be studied with regard to its feasibility and cost-effectiveness. Blockchain or a similar technology is needed to use this kind of money, he said. A blockchain is a list of records on computers. They are called blocks and are linked and secured. A blockchain is operated by a peer-to-peer network and is used to record transactions in a verifiable and permanent manner.

BDL categorically prohibits the use of Bitcoin and other existing crypto currencies. These kinds of currencies represent a danger to consumers and payment systems, according to Salameh. These are not currencies in the true sense of the word, they rather behave like commodities as their price fluctuates for no apparent reason, he said.

The price of Bitcoin recently surged to over $6,000 compared with just $13 at the end of 2012.

Bakaev said that digital currencies are usually used outside the banking system and are hard to control and regulate. He said that local regulations such as the banking secrecy law do not allow for the transferring of bank records to the Cloud and that if this would apply to digital currency, it would mean that the blockchain must be local.

Salameh said that the Central Bank always seeks to develop digital banking and to launch consumer protection programs in this regard. He said that BDL follows a principle that states that citizens should first have a bank account before using digital banking tools such as credit cards, mobile phones, or the Internet.
Reported by Shikrallah Nakhoul
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Date Posted: Oct 27, 2017