Wrapped in the technical language of financial restructuring, the Gap Law is presented as a necessary step to correct the imbalance of Lebanon’s banking system. Behind this rhetoric lies a far more serious reality: the legalization of a massive expropriation of bank deposits, in blatant disregard of property rights, legal certainty, and the very foundations of a liberal economy.
A Bank Deposit Is Not a Favor, but a Right
In any market-based economy, a bank deposit is a full and legitimate form of private property. It rests on a clear contract: the depositor entrusts funds to a bank, which commits to returning them under defined conditions. This contract is the cornerstone of financial trust, savings, and investment.
The Gap Law unilaterally breaks this contract. It transforms a certain, enforceable, and legally protected claim into an uncertain, deferred financial instrument with no clearly defined value. This shift is not technical; it is political and legal. It places the cost of a collapse on depositors for which they bear no responsibility.
In a state governed by the rule of law, such an infringement on private property can only occur under strict conditions: a clearly demonstrated public necessity, fair and prior compensation, and an unquestionable legal framework. The Gap Law meets none of these criteria.
Securities Instead of Cash: A Promise Without Guarantees
At the heart of the mechanism lies the forced conversion of part of deposits into securities issued by Banque du Liban, with maturities of 10, 15, or 20 years. These instruments are not guaranteed by the state, lack backing by clearly valued assets, and do not have a reliable repayment mechanism.
In other words, depositors do not recover their money; they receive an abstract promise based on hypothetical future revenues of Banque du Liban—an institution itself heavily in deficit.
Under any liberal financial logic, such instruments would be classified as highly speculative, if not devoid of real economic value. Imposing them by law on citizens who never consented amounts to replacing contractual freedom with arbitrariness.
Worse still, these securities are presented as a “solution,” when they merely postpone the problem without any certainty of payment at maturity. Nothing guarantees that Banque du Liban will be able, in 10 or 20 years, to honor these commitments. Nothing even rules out a future recycling of these securities through further extensions.
A Deferred but Very Real Expropriation
Supporters of the Gap Law claim that depositors will not suffer a direct “haircut.” This assertion is misleading.
Expropriation is not always brutal; it can be gradual, indirect, and deferred. Replacing a dollar available today with an uncertain instrument payable in twenty years, with no guaranteed value, economically amounts to a massive reduction in the depositor’s wealth. The harm is real, even if concealed behind legal artifices.
In a liberal economy, the value of an asset rests on three pillars: liquidity, security, and predictability. The instruments proposed by the Gap Law meet none of these criteria. They are neither liquid, safe, nor predictable. Therefore, they do not compensate for the loss incurred.
A Direct Attack on Legal Certainty
Legal certainty is one of the foundations of any modern economy. It presupposes that rules do not change retroactively and that contractual commitments are respected.
The Gap Law sends the opposite message:
Contracts can be altered after the fact.
Rights can be unilaterally redefined.
Savings can become an adjustment variable.
Such a precedent is devastating. It affects not only current depositors but also all future savers, investors, and entrepreneurs. Why entrust one’s money to a system where the law can, overnight, turn a certain right into a random claim?
Depositors Versus Banks: A False Debate
The Gap Law seeks to pit depositors against banks, as if the former could be protected by sacrificing the latter. This is artificial and dangerous.
Banks are not the enemies of depositors; they are the mechanism through which savings are transformed into credit, investment, and growth. Destroying the credibility of banks destroys the protection of depositors themselves.
By weakening bank balance sheets, annihilating capital, and exposing institutions to cascading liquidations, the Gap Law further reduces the chances of deposit recovery. This law does not protect depositors; it institutionalizes their loss.
A Law Incompatible with a Liberal Economic Vision
A liberal economy rests on clear principles: responsibility, property, contract, predictability, and trust. The Gap Law violates each of these principles. It replaces freedom with coercion, rules with arbitrariness, and economic responsibility with political transfers.
By refusing to assume the primary responsibilities of the state and the central bank, lawmakers choose the easiest political solution: making depositors, those who cannot defend themselves, pay.
A Red Line Crossed
The Gap Law is not a banking reform, and it is not an orderly restructuring. It is a legalized confiscation, disguised as a technical solution.
A country that trivializes the expropriation of savings destroys the very foundation of its reconstruction. Without respect for property rights, there can be no trust, no investment, and no economic future.
By legalizing the spoliation of deposits, the Gap Law crosses a red line.
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