Lebanon’s Central Bank has disappointed the Lebanese people, to say the least. Its current struggle to keep our currency and lives afloat has been putting us through one of the country’s most persistent and complex financial crises of the era.
Now, it is reportedly seeking “additional powers” in order to regulate and standardize controls that commercial banks are imposing on depositors (thank you for stepping in).
As per the Governor of the Central Bank’s statement on January 12, 2020, these additional powers are intended to ensure “fair relationships” between banks and their depositors.
In seeking to prevent capital flight in recent months, commercial banks have been tightly controlling depositors’ access to their own money, and have also blocked most transfers abroad since October 2019.
The Lebanese authorities have not, however, introduced formal capital controls regulating these measures – rendering this entire process quite illegal.
According to Reuters, the governor confirmed sending a letter to Lebanon’s Minister of Finance on January 9, 2020, seeking the “exceptional powers necessary in order to issue these regulations.”
Most certainly, the measures imposed by commercial banks need to be regulated and unified in order to be implemented fairly and equally upon all depositors and clients.
Lebanon’s Caretaker Government (its name a pun in itself) has not issued any formal statements on Salameh’s request, which was sent out in an official letter to the Caretaker Finance Minister Ali Hassan Khalil.
Salameh insisted in his letter that the implementation of the controls by commercial banks upon their depositors was “on multiple occasions a violation to the rights of some clients, particularly with regard to the unequal treatment clients are facing within the same bank.”
He urged minister Khalil to work with the Government in order to take the necessary legal measures and entrust the Central Bank with the necessary additional powers to combat this reality – as violence has already escalated across banks throughout Lebanon.
In response to a currency shortage, commercial banks have infamously put the Lebanese people on an allowance, since October 2019, and gradually reduced the amount of US dollars they can withdraw.
Many reported that they have experienced similar situations in their attempts to withdraw Lebanese pounds. For most, the cap currently stands at 200 US dollars per week (which will currently barely get you through a few days in this country).
Decades of rampant state corruption and poor governance have put the country in debt, and its people on an allowance, and forced us to continue to adopt a currency that is unpredictable and unreliable.
As the Central Bank’s demands for these additional powers are met with mixed responses, what do Lebanese people really stand to lose at this point anyway?