Insights into Financial Engineering and Central Bank Measures in Lebanon

In the latest monthly report of the Association of Banks in Lebanon, Secretary-General Fadi Khalaf devoted the opening to discuss the issue of financial engineering, as bank revenues from financial engineering have become a subject of analysis according to some analysts, as he stated.

 

Khalaf explains that the Alvarez & Marsal report identified bank revenues from financial engineering at 7.3 trillion Lebanese pounds, which have not been converted into dollars and are still in Lebanese pounds to this day, with no impact on the reserves of the Central Bank of Lebanon.

 

According to Khalaf, in parallel to the launch of financial engineering, the central bank requested banks to increase their funds in Lebanese pounds and prevent them from distributing any profits resulting from financial engineering through its circulars. No profits have been distributed to shareholders, neither in Lebanese pounds nor in dollars.

 

In conclusion, according to Khalaf, financial engineering was based on the principle of raising the interest rates on the dollar by the Central Bank of Lebanon to withdraw available dollars from the market to finance the state and stabilize an artificial exchange rate for the Lebanese pound against the dollar, as part of the government's plan to revitalize the financial sector proposed earlier.