Lebanese Finance Minister Yassine Jaber revealed that depositors’ funds in Lebanese banks will be addressed by granting them bonds.

Jaber said in statements to Al Arabiya Al Hadath channel: “No banking system can return depositors’ funds all at once.”

Lebanese banks are preparing to appoint a consulting firm in anticipation of possible talks with the central bank regarding claims amounting to about $80 billion, a pivotal step in resolving the financial crisis that has hit the most indebted Middle Eastern country and hindered international rescue efforts.

The Association of Banks in Lebanon, which includes about 60 lending banks, is reviewing proposals from firms to conduct negotiations.

After Lebanon defaulted on $30 billion worth of Eurobonds in 2020, local banks resorted to similar discussions with authorities, but progress has stalled since then.

Lebanese lenders deposited billions of dollars in the Central Bank of Lebanon after the so-called financial engineering was launched in 2016, a mechanism that helped finance government spending while banks attracted deposits at high interest rates. However, this mechanism collapsed in 2019 with the drying up of foreign inflows and the collapse of the currency peg to the dollar. The Central Bank was unable to repay its estimated debts to banks of about $80 billion, leading to a confrontation between the two sides since then.

In mid-July, the Central Bank of Lebanon prohibited licensed financial institutions from any direct or indirect dealings with the Al-Qard Al-Hasan Institution affiliated with Hezbollah.

The US Treasury Department had imposed sanctions on the Al-Qard Al-Hasan Institution in 2007, stating that the group uses it as a cover to manage financial activities and as a gateway to access the international financial system.