BDL governor recommends Cabinet subject draft law to thorough and constructive review before submitting it to parliament

The Banque du Liban (BDL) governor issued a formal statement outlining his position on the proposed Financial Stability and Deposit Repayment Law, known as the FSDR bill, expressing broad support for its framework while calling for clearer and binding commitments from the state.

Invoking Articles 71 and 72 of the Monetary and Credit Law, the governor said the government formally consulted him during the drafting process and that he actively participated in the deliberations of the ministerial committee tasked with preparing the bill.

He said he supports the overall structure of the FSDR bill and its core principles, particularly efforts to reduce the financial deficit by eliminating irregular claims, the clear classification of deposits into small, large, and very large categories, and a phased repayment mechanism combining cash payments with asset-backed financial instruments, in line with available liquidity. He also endorsed the principle of sharing financial burdens and responsibilities among the state, BDL, and commercial banks.

The governor stressed that the strength and sustainability of the law must be measured against two key criteria: fairness in distributing financial burdens among all parties, and realistic implementation.

While affirming that the draft law respects the principle of fairness, he said further clarification and reinforcement are needed regarding the state’s obligations. As the final entity to use these funds over many years, he said the state’s contribution must be explicitly defined, measurable, legally binding, and linked to a clear and credible timetable.

The governor emphasized that deposit repayment is a guaranteed legal right, not a political option or discretionary measure. 

However, he said exercising that right requires a repayment program grounded in financial credibility, which depends on the availability of assets, actual liquidity, and a repayment schedule that can be realistically implemented.

He noted that the proposed timeline for cash repayments is ambitious and may need adjustment, if necessary, without infringing on depositors’ rights, to ensure regular, uninterrupted payments and full completion over time.

Given the exceptional importance of the FSDR bill, which he described as the most significant financial legislation since the adoption of the Monetary and Credit Law in 1963, the governor recommended that the Cabinet subject the draft law to a thorough and constructive review before submitting it to parliament, to strengthen its fairness, credibility, and practical enforceability.