Lebanon’s banking association has raised sharp objections to a leaked draft of the country’s financial regulation law, saying it contains “serious flaws in both substance and wording” that could undermine the sector and prolong economic stagnation.
In an open letter to political leaders and depositors, the Association of Banks in Lebanon said the proposal shifts state responsibilities onto commercial banks, risking liquidation of the sector and jeopardizing depositors’ rights. “It is unacceptable for the state to evade its obligations and cause the collapse of banks,” the group said.
The association questioned who would cover depositors’ losses if banks were liquidated, noting repeated government statements that rebuilding the financial sector is vital for Lebanon’s recovery.
As an alternative, the group proposed measures including:
- Ensuring the central bank and commercial banks meet contractual obligations on deposits, backed by state guarantees under Article 113 of the Code of Money and Credit.
- Restoring confidence and credibility in the banking sector to achieve financial stability.
- Returning deposits through allocation of central bank and state assets, while reducing what it called the “unfair burden” placed on banks in the draft law.