Presenting a 33-page document containing substantial remarks on the banking reform bill submitted by the government, the Governor of the Central Bank of Lebanon, Karim Souhaid, attended a session of the Parliamentary Finance and Budget Committee held mid-week. The session was chaired by MP Ibrahim Kanaan and attended by 40 parliamentarians, along with the Ministers of Finance, Economy, and Justice. This was the committee’s second session on the matter, during which the Governor presented his views on the financial crisis and the proposed legislative reforms.
Karim Souhaid offered a comprehensive vision of the crisis, focusing particularly on the draft law. The session featured several key developments, most notably the Governor’s assertion that the crisis Lebanon has faced since 2019 is systemic in nature. Therefore, he argued, any banking reform law must clearly assign responsibilities and capabilities among the state, the banks, and the Central Bank. Only then can the law properly distribute accountability.
The Central Bank, the Finance Committee, and the Ministry of Finance agree on the urgent need for exceptional legislation. The current reform bill does not directly address the crisis but serves as a framework law to modernize the Monetary and Credit Law and establish accountability mechanisms for the future.
During the meeting, the Governor presented a legal study on the independence of the Central Bank and the importance of maintaining coherence in banking legislation. The study highlights that the Central Bank's independence is rooted in the Monetary and Credit Law, issued by Decree No. 13513 on August 1, 1963. Souhaid emphasized that Lebanese legislation has preserved the Central Bank’s independence and the integrity of banking legislation for over 62 years.
However, the new draft law for the reform and restructuring of the banking sector—known as the Bank Resolution Law, approved by the Cabinet on April 12, 2025—is, according to Souhaid, a direct infringement on both the independence of the Central Bank and the consistency of banking legislation. His study also examines the degree to which the proposed laws and amendments align with the principle of central bank independence, warning of legal risks to the structural integrity of the institution.
The study is divided into two main parts. The first addresses the principle of independence of the Central Bank and the need to safeguard the unity and internal coherence of its bodies, free from executive or governmental interference. It also discusses the importance of maintaining legislative consistency across the financial sector.
The second part focuses on the legal fragmentation found in the current draft law, which contradicts the foundational principles of independence and institutional hierarchy that govern the Central Bank’s operations.
In his presentation to the Finance and Budget Committee, Governor Souhaid argued that the independence of the Central Bank and its Governor is at the core of Lebanon’s legal framework—especially the Monetary and Credit Law. Therefore, any changes to this legal structure should aim to strengthen this independence, not undermine, reduce, fragment, or dilute it.
The Governor’s powers are administrative and executive in nature and rely on hierarchical independence in decision-making. Transferring these powers to another entity—either inside or outside the existing legal structure—would destabilize the entire banking sector.
The study further points out that the Governor is supported by internal oversight and investigative bodies—committees within the Central Bank—that allow him to carry out his responsibilities independently and shield the institution from political interference. Any revision of the roles and powers of these committees or their detachment from the Governor would be legally invalid and undermine the Central Bank’s organizational hierarchy.
Moreover, any legal amendments to the banking code or to the regulatory framework governed by the Monetary and Credit Law must remain consistent with the legal architecture. No reform can ignore the essential principles of hierarchy and independence, which are the cornerstones of a sound and autonomous banking system.
Karim Souhaid concluded his study by stating that independence was deliberately granted to the Governor and the Central Council in order to protect the monetary system from political or foreign interference, thus ensuring monetary stability and the soundness of the banking system.
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