The exchange rate peg in an open market economy allows the flow of large amounts of money and helps market participants to take advantage of arbitrage opportunities between domestic and international interest rates. Pegging disconnects the interest rate from real economic conditions of the underlining assets. This is the case of Lebanon, where national banks find a greater return on investment in the risk-adjusted return on government bonds. The main finding in this thesis is that the high level of deposits at commercial banks correlates directly with the level of the Lebanon national debt. ...