BEIRUT: The Association of Banks in Lebanon on Thursday warned against using the Central Bank’s foreign currency reserves under any circumstances, stressing that it would pursue new measures to ensure that these foreign currency reserves are not touched.
Following the meeting of its board of directors, the Association of Banks in Lebanon said ABL reiterated its declared and well-known position that the mandatory reserve should not be compromised under any circumstances, as it constituted an integral part of customers’ deposits with banks, as previously explained by the Association in its letter to the Governor of the Banque du Liban on April 1, 2021.
“The Association holds the state responsible for draining bank deposits with Banque du Liban during the past years and that the continuation of these behaviors will eliminate some of the capabilities that may contribute to the economic and financial revival when the government is formed and the economic wheel is launched in cooperation with international financial institutions and countries supporting Lebanon,” ABL said in the statement.
It added that ABL holds BDL responsible for harming the mandatory reserves and submitting to the pressures exerted on it by the political authorities, contrary to the wording and spirit of the Monetary and Credit Law, where the purpose of the mandatory reserves is limited to the needs of the banking sector.
The association also confirms that reducing the mandatory reserve rate in currencies requires BDL to return the released amounts to the depositors, who have a right to them.
“It is not permissible to use the amounts released recently as a result of reducing the rate from 15 percent to 14 percent for subsidy purposes. We hope that this trend will not be repeated. The association is currently studying the measures that can be used to prevent any harm to the mandatory reserves by the state or the Central Bank,” the statement said.
The Central Bank is coming under increasing pressure from Lebanese authorities to use part of the foreign currency reserves to continue subsidizing basic items such as gasoline, medicine and wheat.
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