Before the First World War, Lebanon and Syria were part of the Ottoman Empire and the Turkish pound was the legal tender. Following the downfall of the Ottoman Empire in September 1918, the Turkish pound was replaced by a Sterling-based Egyptian currency (issued by a private British institution) as the legal tender in the states under the joint French and British mandate. Upon taking Lebanon and Syria under its separate mandate, the French Government sought to replace the Egyptian currency and granted a commercial bank - the Banque de Syrie, a French affiliate of the Ottoman Bank - the authority to issue a currency for the states under its new mandate, namely the new Syrian currency.

As the political status of Lebanon evolved, the Banque de Syrie, which was to act as the official bank for Lebanon and Syria, was renamed the Banque de Syrie et du Liban (BSL). The BSL was granted the sole right to issue a French franc based Lebanese-Syrian currency in Lebanon and Syria for 15 years starting in January 1924. In 1937, two years before the expiry of the 15-year period, the BSL was extended for another 25 years to issue in Lebanon a Lebanese currency separate from the Syrian currency, both of which could be used interchangeably in either state. Although the currency was Lebanese in name, it remained a disguised French franc until 1941, when it was linked to the pound sterling after the defeat of France and the invasion of Lebanon by the allied forces. Following its independence in 1943, Lebanon concluded a monetary agreement with France in 1948 separating its national currency from the unstable French franc (Law of May 24th, 1949). Lebanon sought the Lebanisation of the BSL. A council known as the Council of Money and Credit was formed to draw up the Money and Credit Code and the by-laws of Lebanon's future central bank, the Banque du Liban (BDL).
The legal tender is the Lebanese Pound (LBP)