What is banks actual stance on Capital Control law?

3^min

Banks are accused of opposing the Capital Control project in one place while supporting it in another based on their interests at a time when it is still stalled in parliamentary committees. Its approval has been postponed for three years.

Banks are also accused of wanting to continue transfers abroad. Fadi Khalaf, Secretary-General of the Association of Banks, responds to this by stating that any future transfers abroad cannot be in the banks' favor since they are currently having their viability evaluated by international and regulatory bodies according to their liquidity in foreign currencies.

Therefore, any transfers abroad will undoubtedly reduce its foreign currency liquidity and endanger its continuity.

In a review of this discussion, the banks support using the Capital Control Law to halt transfers abroad.

Clarifying the fact that banks oppose the Capital Control because they do not have enough to pay a thousand dollars a month, Khalaf says: Most banks may not currently have sufficient liquidity to pay a maximum of $1,000 per month, but banks continue to implement Circular 158 according to the following equation:

800 US dollars, half of which is in Lebanese Lira and the other half in US dollars in cash based on 200 dollars secured by the Central Bank and 200 US dollars that the banks secure from their liquidity.

Therefore continuing the application of Circular No. 158 remains the closest to possible. Everything else is far from reality, and banks will not be able to adapt to it.

This implies that the banks disagree with the Capital Control Law's $1,000 withdrawal cap, making it abundantly clear that they cannot support it.

According to Khalaf, the reason why banks want capital control is that some of the large depositors who live abroad are the ones who succeed in their legal battles against the banks, which causes the banks to lose liquidity that is supposed to be distributed equally to all depositors under Circular 158.

He asserted that allowing a small number of non-resident depositors to assume the rights of small depositors who lack the financial means to pay the costs of international lawsuits is entirely discretionary and can be referred to as large depositor lawsuits against small depositors. He also pointed out that the best way to address discretion is by preserving little liquidity, despite its scarcity with banks, to be used to pay deposits through Circular 158.

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