Union of Arab Banks submits plan to government for industry-wide reform

Hopes of retrieving our money frozen in banks are dwindling in the absence of reforms, plans, and a deal with the International Monetary Fund (IMF).

The Union of Arab Banks (UAB) collaborated with experts to create a reform paper. The paper criticizes the government's plan, arguing that it has a negative impact on depositors and erodes trust in banks.

How come?

First, the government's plan eliminates Banque du Liban's debts to banks, thus, the loss of deposits.

Second, because the plan only seeks to protect each depositor up to $100,000, the deposit of a large depositor is equal to that of a small depositor.

On the other hand, the Union of Banks paper suggests an alternative: to ensure banks have access to liquidity, all state debts should be rescheduled over a specific period. 

In exchange, banks should reschedule all deposits in accordance with their capacity and the size of each account so that deposits are returned over time.

The reform paper calls for implementing several reforms, beginning with the liberalization of the exchange rate, to regain confidence and introduce dollars into the country and banks.

A meeting of the general secretaries of the Arab Banks Associations, which brought together roughly 14 Arab nations in Beirut, discussed this reform paper and submitted it to the government.

Will the paper end up in the same filing cabinets as previous documents and plans?