BREAKDOWN: When Currencies Fail... A Primer on the Dollar Crisis in Lebanon
CoinDesk Podcast Network
CoinDesk
4.8 • 689 Ratings
🗓️ 29 April 2020
⏱️ 23 minutes
🧾️ Download transcript
Summary
The Lebanese pound has lost at least 50% of its value against the dollar since last year. 220,000 people have lost their jobs. Food prices are up 58%. An estimated 75% of the population needs assistance of some kind. And over the last two nights, at least a dozen banks have been torched by protesters.
The catalyst? Not coronavirus, but a massive dollar shortage that is destroying an economy that relies on inflows of US dollars to function.
In this episode, NLW breaks down how Lebanon models what it looks like for a currency to fail, and why this likely isn’t the last emerging market currency to experience a similar crisis in the months to come.
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Transcript
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| 0:00.0 | Welcome back to The Breakdown, an everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond, with your host, NLW. |
| 0:15.0 | The Breakdown is distributed by CoinDesk. |
| 0:20.0 | Welcome back to The Breakdown. It is Wednesday, April 29th, and today we are |
| 0:25.5 | going to be talking about Lebanon, specifically the currency crisis overlapping a political crisis, |
| 0:33.2 | overlapping a larger economic crisis that is engulfing Lebanon, and I think has relevance for how |
| 0:38.8 | we understand the dollar in the world, the dollar's role in the world, and the fallout |
| 0:43.5 | from COVID-19. I wanted to bring this episode to you because I noticed last week Lebanon |
| 0:50.1 | start to emerge in the cryptosphere, and there were two contexts. The first was Dan Tapiero |
| 0:56.7 | picked up on a piece by NewsBTC noticing that Bitcoin seemed to be trading at $15,000 in Lebanon |
| 1:04.5 | via local Bitcoins.com, which is a peer-to-peer platform for trading Bitcoin between people. |
| 1:11.8 | He said, |
| 1:13.0 | classic emerging market funding crisis made worse by deflationary dollar peg that is breaking. |
| 1:18.0 | Study this case as it will be modeled for other weak emerging markets, |
| 1:21.6 | will be a key part of the macro story behind upcoming Bitcoin price rally. |
| 1:26.1 | NewsBTC, they titled their article article Bitcoin trades at 15K in Lebanon |
| 1:31.3 | amidst economic turmoil, showing its real potential. That was part one of how this showed up on the |
| 1:37.9 | Bitcoin radar. And of course, you see Bitcoin trading at a seemingly 100% premium against what we were seeing it at, it's going to |
| 1:45.7 | cause notice. The second context that Lebanon has had to enter the Bitcoin sphere, the Bitcoin |
| 1:52.0 | Twitter sphere, is images and videos of riots in Lebanon where protesters are smashing banks |
| 1:59.9 | and setting fire to banks over the last two days. |
| 2:03.2 | And that is happening, but it has a specific context. |
| 2:07.0 | And I think it's incredibly important to dig into this because this is not just a single |
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