Acting Governor of the Central Bank, Wassim Mansouri, has agreed with the Association of Banks in Lebanon (ABL) to discuss the replacement of Circular 151. This would enable beneficiaries to receive a monthly cash payment of $150. Yet, based on the information available from Tuesday's meeting at Lebanon’s Central Bank (BDL), perspectives between Mansouri and the ABL remain divergent.
Mansouri is adamant that banks are capable of disbursing the $150 to Circular 151 beneficiaries and that, once the decision is promulgated, the banks must comply. According to relayed information, Mansouri rejects the classification of deposits into eligible and ineligible, asserting that it is beyond the Central Bank's authority to set the dollar exchange rate. He argues that the market determines this matter, and the Banque du Liban has published the market rate on its website, currently standing at 89,500 Lebanese pounds.
Based on this piece of information, Mansouri affirms the issue is beyond his purview but rather lies with the authority tasked with defining the dollar exchange rate in the upcoming budget, set to be approved this week. He emphasizes that this authority should also implement a capital control law, the exclusive means to shield banks from a surge of depositors seeking withdrawals after the budget is approved at a rate of 89,000 Lebanese pounds per dollar. Moreover, Mansouri's unwavering stance against allowing the Central Bank to assume roles that are not entrusted to it, do not fall under its jurisdiction, and are not stipulated by the Code of Money and Credit.
Conversely, banks perceive Mansouri's swift endorsement of $150 for each Circular 151 beneficiary as rushed and in need of further deliberation. This is particularly noteworthy as not all banks can readily secure the estimated $300 million in annual liquidity in dollars, knowing that they have escalated their dollar expenditures due to the increasing number of Circular 158 beneficiaries, who are receiving $300 monthly per individual. The surge in beneficiaries is attributed to new depositors who refrained from participating in the past due to the haircut they faced. Banks have urged the Central Bank to restore their mandatory reserves to meet potential dollar demand. However, according to sources close to banks, the Central Bank has refused this request.
Banks have advocated for the payment of $150 to be made in Lebanese pounds. However, the Central Bank's acting governor, Wassim Mansouri, rejected this proposal, considering that such a move could lead to increasing the money supply in Lebanese pounds and using it for speculations, thus contributing to an increase in the dollar's exchange rate.
Mansouri is adamant that banks are capable of disbursing the $150 to Circular 151 beneficiaries and that, once the decision is promulgated, the banks must comply. According to relayed information, Mansouri rejects the classification of deposits into eligible and ineligible, asserting that it is beyond the Central Bank's authority to set the dollar exchange rate. He argues that the market determines this matter, and the Banque du Liban has published the market rate on its website, currently standing at 89,500 Lebanese pounds.
Based on this piece of information, Mansouri affirms the issue is beyond his purview but rather lies with the authority tasked with defining the dollar exchange rate in the upcoming budget, set to be approved this week. He emphasizes that this authority should also implement a capital control law, the exclusive means to shield banks from a surge of depositors seeking withdrawals after the budget is approved at a rate of 89,000 Lebanese pounds per dollar. Moreover, Mansouri's unwavering stance against allowing the Central Bank to assume roles that are not entrusted to it, do not fall under its jurisdiction, and are not stipulated by the Code of Money and Credit.
Conversely, banks perceive Mansouri's swift endorsement of $150 for each Circular 151 beneficiary as rushed and in need of further deliberation. This is particularly noteworthy as not all banks can readily secure the estimated $300 million in annual liquidity in dollars, knowing that they have escalated their dollar expenditures due to the increasing number of Circular 158 beneficiaries, who are receiving $300 monthly per individual. The surge in beneficiaries is attributed to new depositors who refrained from participating in the past due to the haircut they faced. Banks have urged the Central Bank to restore their mandatory reserves to meet potential dollar demand. However, according to sources close to banks, the Central Bank has refused this request.
Banks have advocated for the payment of $150 to be made in Lebanese pounds. However, the Central Bank's acting governor, Wassim Mansouri, rejected this proposal, considering that such a move could lead to increasing the money supply in Lebanese pounds and using it for speculations, thus contributing to an increase in the dollar's exchange rate.
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