The principal cause of the current monetary crisis is Banque du Liban’s (BDL) long-standing “financial engineering”, which consists in borrowing $-funds from local banks at unusually high margins above interest rates prevailing in international markets, resulting in high BDL $-debt and negative net reserves. The budget deficits and government debt have mostly financed current rather than capital expenditures, while swelling employment in the public sector, which also contributed to the financial deterioration.