Lebanese Banks Say They Can’t Secure Any Fresh USD Regardless Of Rate

Lebanese Central Bank Governor Riad Salameh has agreed to raise the value of U.S. dollar deposits in Lebanon, Al-Akhbar reported on Thursday.

Lebanese banks have announced that they cannot abide by the latest decision of the Central Bank of Lebanon regarding paying depositors fresh U.S. dollars on a monthly basis.

In a statement that followed the Banque du Liban’s (BDL) announcement of the said decision, the Association of Banks in Lebanon (ABL) stressed that banks are “unable to provide any cash in foreign currency, no matter how low its value.”

This is because Lebanese banks’ foreign currency liquidity with correspondent banks “is still negative by more than a billion dollars,” the ABL explained, citing central bank statistics.

The above was clear in the World Bank’s latest report on Lebanon, as well as in the data provided by global financial institutions and international rating agencies, the statement added.

According to the ABL, cash withdrawals can only be provided by reducing the mandatory reserve rate required on bank deposits with the Central Bank.

The statement noted that the obligatory reserve basically constitutes a guarantee for depositors and is resorted to in crises and emergency situations, “such as the ones that exist in Lebanon today.”

Finally, the ABL asked Central Bank Governor Riad Salameh to wait before issuing any circular that forces banks to commit to cash withdrawals in foreign currency, “hoping that it would be part of the Capital Control law proposal being circulated in Parliament.”

The BDL had announced earlier on Friday a decision whereby banks would begin to pay $400 in fresh dollars and their equivalent in Lebanese pounds, on a monthly basis, to holders of bank accounts dating before October 2019.

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