Most Lebanese banks seemed willing to meet the Central Bank’s instructions to allow depositors who had foreign currency accounts before October 17, 2019, to start withdrawing $400 banknotes and its equivalent in pounds based on BDL’s exchange platform rates although some were not sure if these cash payments can be sustainable the second year.
BDL asked all commercial banks in Lebanon to allow their customers who meet Circular 158 criteria to provide the necessary funds for the next five years.
Many depositors who had foreign currency accounts before the mass anti-government protests were up in arms after the lenders applied strict capital control on withdrawal of dollar banknotes. Instead, banks, upon the instructions of BDL, offered their customers with foreign accounts LL3,900 for each dollar (better known as lollar) to appease their anger.
“After the release of the circular, banks are now obliged to meet the conditions set by BDL. I think we will be able to allow our customers to withdraw $400 in cash for the first year at least and then we have to wait and see,” a chairman of a leading bank told The Daily Star.
But some economists and financial analysts warned that printing more pounds and injecting them into the market will cause huge inflation and make the national currency weaker against the US dollar.
BDL said that the payment of $400 in Lebanese pounds will result in an increase of the money supply in pounds between LL26 trillion to LL27 trillion over a one-year period, stressing that this new decision would be a prelude in solving the problem of the banks that were not able to raise 3 percent liquidity in foreign currency.
Hassan Khalil, a financial analyst and economic expert, argued that BDL’s Circular 158 was illegal, cautioning that the whole idea was to ditch the small depositors in the first year.
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