The peg between the weak local Lebanese Pound and the globally strong US Dollar is an anomaly since the US is neither the main supplier nor the main client of Lebanon. In recent months, the Lebanese Pound has weakened against the US Dollar on the black market, while the official exchange rate remains unchanged amid an increasing shortage of dollars, thus creating arbitrage opportunities.

To address the situation, the Lebanese Pound should be pegged against a basket of currencies including the US Dollar and Euro because the European Union is the main supplier and the main client of Lebanon. At a later stage, a floating exchange rate should be adopted.

The fixed rate adopted by the Central Bank of Lebanon was maintained by offering high-interest rates—paid by accumulating more debt that has been repaid by a poorer population to Lebanese banks and by banks to their depositors and to international markets.

This largest government-sponsored Ponzi scheme in history worked until the war in Syria broke out in 2011, leading to an economic slowdown in Lebanon. Since then, the Lebanese economy hasn’t expanded amid a widening twin trade and budget deficits.

Unlike Bernie Madoff's Ponzi scheme, which used a “split-strike option strategy” based on lies that affected a few hundred rich investors, Lebanon’s version of the scheme is having an impact on all of its population.

Nasser Saidi, a former BDL vice-governor (from 1993 to 2003) and former industry, economy and trade minister (1998-2000); described BDL’s financial engineering as a “Ponzi scheme” that relies on fresh borrowing to pay back the existing debt.

Nassim Nicholas Taleb, the author of The Black Swan, shared that view. In response, the legal department of the Central Bank of Lebanon said its operations were in conformity with the law as set out in the 1963 Code of Money and Credit.