Jump to content

Banque du Liban

From Wikipedia, the free encyclopedia

This is an old revision of this page, as edited by CommonsDelinker (talk | contribs) at 17:52, 30 September 2023 (Removing Governor_of_Banque_Du_Liban.jpg; it has been deleted from Commons by Yann because: per c:COM:SPEEDY..). The present address (URL) is a permanent link to this revision, which may differ significantly from the current revision.

Banque du Liban
مصرف لبنان (Arabic)
HeadquartersBeirut, Lebanon
EstablishedAugust 1, 1963 (61 years ago) (1963-08-01)
Ownership100% state ownership[1]
Acting Central Bank GovernorWassim Mansouri
Central bank ofLebanon
CurrencyLebanese Pound
LBP (ISO 4217)
Reserves38 440 million USD[1]
Bank rate2.75%
Interest on reserves4.00%
Websitewww.bdl.gov.lb
French language inscription "Banque du Liban" on the headquarters of the Bank of Lebanon.

Banque du Liban (Template:Lang-ar; English: Bank of Lebanon) is the central bank of Lebanon. It was established on August 1, 1963, and became fully operational on April 1, 1964. It has been headed by Wassim Mansouri since 2023.

One of the main responsibilities of the bank is issuing Lebanon's currency, the Lebanese Pound. Other responsibilities include maintaining monetary stability, regulation of money transfers, and maintaining the soundness of the banking sector. Banking is a very important part of Lebanon's economy with over 100 different banks, which makes the role of BdL particularly important. It currently owns 99.37% of the shares of Lebanon's national carrier, Middle East Airlines.[2] The BdL is also the dominant shareholder of the Intra Investment Company (IIC) which in turn owns 53% of Casino du Liban, making it the only central bank worldwide to rule over a Las Vegas-style gambling casino.[3]

Besides the main branch in Beirut, it has branches in Aley, Baalbeck, Bikfaya, Jounieh, Nabatiye, Sidon, Tripoli, Tyre, and Zahlé.

Background

Economy of Lebanon
Overview
Other topics

Ottoman domination of Lebanon, which lasted for more than four centuries, was brought to an end on October 6, 1918, with the entry of the Levant Marine Division into Beirut. The paper money issued by the Turkish Treasury, with a forced exchange rate, suffered the same fate.

In order to normalize economic life in the occupied territories and cover the expenses of the allied forces, British authorities imposed the banknotes of the National Bank of Egypt, the Egyptian currency having been, since October 30, 1916, closely linked to sterling and entirely covered by securities issued in sterling.

In accordance with the convention signed between the French and the British governments on September 15, 1919, a new occupying authority started to rule Lebanon. French troops replaced the British, under the command of General Gouraud, who was appointed on October 12, 1919, as "High-Commissioner of the French Republic in Syria and Cilicia, and Commander-in-Chief of the Levant Army". Consequently, the use of the Egyptian currency, suitable for the British Treasury, became inappropriate. To obtain Egyptian pounds, France, being the sole occupying power, had to offer increasing amounts of francs.

During World War I, the French franc had maintained its status thanks to advances from the British and American treasuries. However, in 1919, the French franc registered a drop because of the British government's decision to stop these advances, thus breaking the alliance between the franc, sterling and the dollar, and also because of the United States Government's decision to suspend its regulating role of the associated change rates. In order to replace the Egyptian pound, the French government decided, by Decree N° 129 issued by the High Commissioner on March 13, 1920, to endow Syria with a national currency.

On September 1, 1920, the representative of France proclaimed Great Lebanon. In 1920, the Banque de Syrie et Liban ("Bank of Syria and of Lebanon"), which had been created for that purpose by the French-controlled Ottoman Bank, was granted the concession of issuing the Syrian-Lebanese currency, which became legal tender on May 1, 1920. Banknotes issued by this bank were reimbursable to the bearer or at sight by checks drawn on Paris, at the rate of FF 20 for £S 1 .

As a consequence, an independent, currency-issuing department was established at the Banque de Syrie et Liban. It was responsible for putting in circulation and withdrawing banknotes. Issuances were made either on behalf of the Treasury in Paris or on behalf of the Bank itself.

Concerning commercial operations, the Issuing Department was to provide the Banque de Syrie with banknotes only in exchange of foreign currencies or foreign securities, which constituted, together with the credits granted by the Treasury in Paris, the coverage of the currency in circulation. The Banque de Syrie et du Liban's Issuing Department would later form the basis for the establishment of the Banque du Liban.

Role and function

The Banque du Liban was established by the Code of Money and Credit promulgated on 1 August 1963, by decree no. 13513. It started to operate effectively on 1 April 1964. BDL is a legal public entity enjoying financial and administrative autonomy. It is not subject to the administrative and management rules and controls applicable to the public sector. Its capital is totally appropriated by the State.

Monetary policy

A favorable environment has characterized the Lebanese economy in 2003. Lebanon is maintaining its commitment to exchange rate stability and to the soundness of its banking sector, in addition to implementing an ambitious fiscal adjustment program.

Confidence was boosted by the successful outcome of Paris-II conference, held in November 2002 with the participation of a number of countries and international organizations. An aggregate amount of US$4.3 billion was pledged in 15-year loans at reduced rates to support the government's economic reform plan for lowering the servicing cost of public debt, which accumulated over the years due to costly reconstruction efforts.

These developments led to a significant drop in TBs' interest rates, followed by a cut in commercial banks' average deposit and lending rates in Lebanese pound (LBP) and in foreign currencies. In parallel, USD holdings were being converted on a wide scale into LBP holdings. Moreover, the BOP performance, which started to improve in May 2002, remained on the same trend, with cumulative surpluses exceeding $2 billion at end-April 2003, while BDL assets in foreign currencies stood at more than $10 billion, excluding gold.

In the last few months, a strong demand emerged on Lebanese government paper in local and foreign currencies, due to increased confidence, reinforced in April by the Government's ability to pay from the Treasury a maturing $500 million Eurobond issue, without resorting to rollover as in the past. This was accompanied by a positive assessment by the IMF and major international rating agencies, which considered that Lebanon is on the right track in trying to end its economic and financial difficulties, and that its performance in coping with the aftermath of the war in Iraq is the best in the region.

In the banking sector, equity capital continued to increase, reaching $3.5 billion at end-April, and pushing the average capital adequacy ratio to 18%. Despite their modest growth, private sector loans attained 100% of GDP, a unique performance in itself. Deposits grew at an annual 11% rate, reaching $47 billion at end-April - more than double the GDP - with a dollarization rate dropping to 68%, from a 74% peak in May 2002. This excellent performance was buttressed by the BDL's efforts to strengthen prudential supervision, paving the way for compliance with Basle-II requirements by a sound banking sector, ready to better manage operational risks, and to improve transparency and good governance.

The government's commitment to decelerate the growth of public debt and to reduce its servicing cost was reflected in the conservative budgets of 2002 and 2003. Coupled with measures to achieve the highest possible proceeds from privatization and securitization, this strategy will be pursued over the medium term, expectedly leading to a public finance recovery.

The government has recently launched an ambitious 5-year economic reform program in hopes to cut the country's debt. The outcome of the reform program will largely be dependent on Banque du Liban.

Governing body

The Banque du Liban is managed by the Governor who is assisted by four vice-governors, as well as by the Central Council. By convention, the Governor of the Banque du Liban is always a Maronite Christian.[4]

The Banque du Liban is managed by the Governor assisted by four vice-governors and the Central Council. The Governor is the legal representative of the Banque du Liban and has extensive authority over the management of the bank. He is entrusted with the enforcement of the Code of Money and Credit and the implementation of the Central Council's resolutions. Upon the proposal of the Minister of Finance, the Governor is appointed by decree sanctioned by the Council of Ministers, for a renewable six-year term. After the consultation with the Governor and upon the proposal of the Minister of Finance, the vice-governors are appointed by decree sanctioned by the Council of Ministers for a renewable five-year term. They assist the Governor in managing the bank, carrying out functions specified by the Governor, In addition, they assume their duties as members of the Central Council.

Governors

List of governors of the Banque du Liban:[5]

No. Image Name

(Signature)

Term start Term end Time in office Notes
1 Philippe Takla

(1915-2006)

August 28, 1963 June 6, 1967 3 years, 292 days Was first elected to the Lebanese parliament in a by-election held in May 1945 in Mount Lebanon as a result of the death of his father, Salim Takla
2 Elias Sarkis

(1924-1985)

June 7, 1967 June 2, 1976 8 years, 352 days Also served 6th president of Lebanon the same year as the end of his tenure.
- Joseph Oughourlian June 2, 1976 September 6, 1978 2 years, 96 days Ad Interim
3 Michel el-Khoury September 6, 1978 January 15, 1985 6 years, 131 days Also Served as Defense minister between 1965 and 1966
4 Edmond Naïm January 15, 1985 January 16, 1991 6 years, 1 day Politically aligned with the Progressive Socialist Party and was later an MP for the Lebanese Forces.
(3) Michel el-Khoury January 16, 1991 June 7, 1993 2 years, 142 days Also Served as Defense minister between 1965 and 1966
5 Riad Salamé June 7, 1993 Incumbent 31 years, 174 days In February 2022, a subpoena was issued by Judge Ghada Aoun after Riad Salameh failed to show up to court for questioning, while is whereabouts were unknown after a raid in his office and 2 homes, as part of an investigation for alleged misconduct and corruption.[6][7] This sparked controversy with another security agency that was accused of protecting him from trail. Later in March 21, Salameh along with his brother Raja were charged for illicit enrichment by Ghassan Oueidat but also failed to attend for questioning.[8][9]

The Central Council

The Central Council sets the monetary and credit policies of the Bank, including money supply, and discount and lending rates. It discusses and decides, among other things, on issues concerning the banking and financial sectors, the establishment of clearinghouses, the issuing of currency and loan requests by public sector entities. The Council decides also on the rules and procedures that govern the staff and operations of the Bank, and on its annual budget and accounts. The members of the Central Council are:

  • The Governor, as chairman.
  • The four vice-governors.
  • The Director General of the Ministry of Finance, ex officio but strictly as member of the council.
  • The Director General of the Ministry of Economy and Trade, ex officio but strictly as a member of the council.

Capital Market Authority

The management of the Capital Markets Authority (CMA) is entrusted to a board formed of seven members and chaired by the Governor of Banque du Liban, the central bank of Lebanon. The board is composed of three full-time executive board members who are experts in capital markets, banking and financial affairs, and three part-time members representing ministries and other authorities directly involved in the work of the CMA: The Director General of the Ministry of Finance, the Director General of the Ministry of Economy and Trade and the Chairman of the Banking Control Commission.

The CMA Board has extensive powers that aim to enhance investor protection and promote investment in the financial markets. It has the power to establish general regulations concerning the establishment and management of stock exchanges, as well as regulations concerning the establishment and functioning of financial intermediation institutions which manage investment funds and collective investment schemes for the public. The CMA board is entrusted by Law 161/2011 to set the code of conduct for stock exchange institutions and their employees, as well as financial service providers and their employees. The CMA board has the power to regulate governance-related issues, such as the obligations of financial instrument issuers to publish and disclose to the public price-sensitive information. In the same context, the CMA board has the power to license the establishment and functioning of financial intermediation institutions, approve securitization activities, ratify (or cancel previous ratification of) the decisions taken by the administration of each stock exchange concerning the registration of securities and financial instruments; and approve the regulations set by the administrations of stock exchanges concerning the transactions undertaken on such stock exchanges.

Moreover, the CMA Board is mandated by law to issue consultations and opinion on draft laws and decrees related to the work and development of the capital markets in Lebanon.

The Special Investigation Commission

The Special Investigation Commission (SIC) is a multi-function financial intelligence unit (FIU) with judicial status. It is the centerpiece of Lebanon's anti-money laundering (AML) and counter terrorist-finance (CFT) regime, a platform for international cooperation and plays a vital role in safeguarding concerned sectors from illicit proceeds. The SIC's tasks include receiving and analyzing suspicious transaction reports (STRs), conducting financial investigations, lifting banking secrecy, freezing accounts and/or transactions and forwarding them to concerned judicial authorities. With respect to terrorism and the financing of terrorism, the SIC is also empowered to prevent the use of movable or immovable assets. In addition to sharing ML / TF intelligence with counterparts and coordinating with foreign/local competent authorities on requests of assistance (ROAs), the SIC also proposes AML / CFT regulations and issues new regulations and recommendations to concerned parties. AML / CFT supervision via compliance examinations at banks and other reporting entities to ensure proper implementation of prevailing regulations is also among its tasks. The SIC is managed by the Governor Mr. Riad Salamé assisted by the president of the Banking Control Commission, a professional appointed by the Council of Ministers and the judge appointed to the Higher Banking Commission.

The Higher Banking Commission

The Higher Banking Commission was established at Banque du Liban in 1967, pursuant to Article 10 of Law No 28/67. It is composed of:

  • The Governor of the Banque du Liban, as Chairman
  • A vice-governor selected by the Central Council of the Banque du Liban
  • The Director General of the Ministry of Finance
  • A high-ranking judge, with a ten-year experience at least, approved by the Higher Judicial Council and appointed by decree;
  • A member of the Banking Control Commission, nominated by the Association of Banks in Lebanon
  • The chairman of the National Deposit Guarantee Institution (NDGI)

Investment policy for startups

Aug. 22, 2013, Central Bank of Lebanon issued the new investment policy called "Circular No. 331".[10] This aim to support Lebanon's knowledge economy by providing support to the thriving startup ecosystem. With this audacious move, Lebanon's Central Bank hopes to increase the country's GDP, decrease unemployment and position Lebanon as the tech hub of the Middle East.[11][12]

The outcomes of the circular have however fallen short of the expectations.[13] Many Lebanon's observers pointed that the initiative lacked transparency: There has been no clear indication of the number of start-up funded, jobs created and money spent.[14][15] The initiative was unable to overcome a major hurdle of the Lebanese economy: banks' extremely risk adverse and conservative attitude towards investment.[16]

Circular No. 331 encourages commercial banks to invest in start-ups. The BDL will guarantee up to 75% of the value of these commercial bank investments in the capital of start-ups that meet the determined criteria.[17] Here are some of the start-ups that are innovative Lebanese companies working in the knowledge economy sector and have contribute to creating jobs.

  • MEVP - is a Middle East-focused venture capital firm that invests in the early and growth stages of innovative companies run by talented entrepreneurs Walid Hanna and Walid Mansour primarily, but not exclusively, in the Middle East Region with a focus on the GCC and Levant markets.[18]
  • Berytech - a Lebanese tech focused business development center, has recently announced a $50 million investment fund, the Berytech Fund II. Berytech incubator is led by chairman Maroun Chammas.[19]
  • Leap Ventures - is a growth stage Venture Capital firm in the Middle East and North Africa, based out of Beirut and Dubai. Leap Ventures looks to make investments in innovation & technology startups from the MENA region that have reached the series B stage: startups that have established a market presence and are seeking to dramatically accelerate their global market penetration and commercialization. Leap Ventures is led by founding partners Henri Asselly and Hala Fadel.[20]
  • Presella - an event management technology startup with the primary focus on a paperless e-ticketing platform for the MENA region. The platform is supported by a Last minute ticket mobile application and an in-event door management application. APPS Currently in closed Beta in Dubai & Beirut.[21]
  • My ME - is a socially-responsible, personal travel planning service that helps guests design and implement trips to the Middle East and the Eastern Mediterranean based on their own travel dates, travel preferences, and personal style. My Middle East - prepares personalized travel plans to Egypt, Lebanon, Syria, Turkey, and Croatia (and soon other destinations).
  • Kashida - is the first registered company in the world to transform the Arabic letterform into evocative, functional 3D design pieces. They offer contemporary home décor accents, furniture, corporate gifts and event souvenirs to create a more personalized living/work space for our B2B and B2C clients.[22]
  • Egnyt Technology incubator managed by Samir Chreim. Egnyt recently opened 2,500-sqft business incubator in Beirut that is meant for enterprises focusing on technology.[23]

According to the circular, the total participation of any bank in start-ups may not exceed 3% of the bank's capital, provided the participation of any bank in a single start-up does not exceed 10% of the aforementioned 3%. Thus, commercial banks must invest in at least 10 start-ups if they want to benefit from all the facilities provided to them by BDL.

The startup accelerator UK Lebanon Tech Hub is a startup initiative between Banque du Liban and the UK government.[24]

Allegations of misconduct

In November 2020, The Wall Street Journal reported that the United States and other Western countries demanded a forensic audit of the Banque du Liban, as it was accused of money laundering, corruption and links to Hezbollah.[25]

See also

References

  1. ^ a b Jan Weidner (2017). "The Organisation and Structure of Central Banks". Technische Universität Darmstadt. p. 233.
  2. ^ "La MEA dévoile les nouveaux équipements de son centre de formation". L'Orient Le Jour. 2017-11-02.
  3. ^ Berthier, Rosalie (2 May 2017). "Abracada...broke - Lebanon's banking on magic". www.synaps.network. Archived from the original on 2020-07-05. Retrieved 2021-11-16.
  4. ^ "Will Michel Aoun replace the governor of the central bank? | Makram Rabah".
  5. ^ "Governors past and present - Banque du Liban". www.bdl.gov.lb.
  6. ^ "Lebanon security forces raid central bank chief's home to execute subpoena". Al Arabiya English. 2022-06-22. Retrieved 2022-06-22.
  7. ^ "Lebanon's Central Bank Chief Vanishes as Corruption Probe Mounts". VOA. 16 February 2022. Retrieved 2022-06-22.
  8. ^ "Lebanon charges central bank governor Riad Salameh and his brother". The National. 2022-03-21. Retrieved 2022-06-22.
  9. ^ Rose, Sunniva (2022-06-21). "Lebanon security forces sent to raid home of central bank governor". The National. Retrieved 2022-06-22.
  10. ^ "Lebanese Central Bank pushes start-up investments - Al-Monitor: the Pulse of the Middle East". Al-Monitor. 2014-09-09. Retrieved 2015-11-16.
  11. ^ Megaphone, Startup. "BDL Circular 331: Injecting $400 Million into Lebanon". Startup Megaphone. Archived from the original on 2015-11-17. Retrieved 2015-11-16.
  12. ^ "What the Central Bank of Lebanon's new investment policy means for…". wamda. Retrieved 2015-11-16.
  13. ^ Babin, Justine (2018-12-21). "Financing startups: the shortcomings of Circular 331 -". Commerce du Levant. Archived from the original on 2018-12-27. Retrieved 2021-11-22.
  14. ^ Tibi, Marwan (2017-09-25). "What Is The Impact of Banque du Liban's Circular 331 on the Lebanese Economy?". Beirut Today. Retrieved 2021-11-22.
  15. ^ Rimington-Pounder, Sophie (27 April 2016). "Circular 331: where has Lebanon's money gone?". Wamda. Archived from the original on 2016-04-28. Retrieved 2021-11-22.
  16. ^ Babin, Justine (2018-12-28). "Financing startups in Lebanon: the shortcomings of 331". L'Orient Today. Archived from the original on 2021-11-22. Retrieved 2021-11-22.
  17. ^ "Let the investment games begin - Executive Magazine". Executive Magazine. 2014-03-03. Archived from the original on 2015-09-16. Retrieved 2015-11-16.
  18. ^ "MEVP's IMPACT Fund announces $12.5M investment in 5 Lebanese tech…". wamda. Retrieved 2015-11-16.
  19. ^ "Berytech Fund II Launches with $50M". Arabnet. Retrieved 2015-11-16.
  20. ^ "$71 million Leap Ventures fund officially launched at ArabNet 2015 - Zawya". www.zawya.com. Retrieved 2015-11-16.
  21. ^ "Presella first to benefit from BDL's circular gets 300k investment". wamda. Retrieved 2015-11-16.
  22. ^ "Lebanon's top 20 entrepreneurs 2013 - Executive Magazine". Executive Magazine. 2013-12-13. Archived from the original on 2015-12-01. Retrieved 2015-11-16.
  23. ^ "SCAS Inc. To Launch Technology Incubator". Yahoo Singapore Finance. Archived from the original on 2015-11-17. Retrieved 2015-11-16.
  24. ^ Munford, Monty (2017-01-20). "From bombs to bytes: How Beirut's tech scene is thriving". BBC News.
  25. ^ "Lebanon's Central Bank Fuels Corruption, Extremism Concerns". The Wall Street Journal. 30 November 2020.
Retrieved from "https://en.wikipedia.org/w/index.php?title=Banque_du_Liban&oldid=1177952826"