Six years on, Lebanon’s banking crisis deepens without legislative solution

Report by Lea Fayad, English adaptation by Karine Keuchkerian

Six years have passed since the onset of Lebanon’s financial crisis, yet no legislation has been enacted to regulate the ongoing disorder in the banking sector.

During this time, major depositors have filed lawsuits abroad in an effort to force banks to release millions of dollars in frozen funds. Meanwhile, smaller depositors — whose savings remain trapped — lack the resources to pursue similar legal action overseas.

In response, Banque du Liban (BDL) issued a new circular prohibiting banks in Lebanon from paying out funds tied to foreign court rulings related to accounts frozen before the 2019 crisis unless explicitly approved by the central bank.

The measure aims to preserve what remains of liquidity in the banking system, address disparities in the treatment of depositors, and bring a degree of order to the sector—this is what the central bank governor communicated to the finance minister.

Still, the governor’s move is no substitute for long-overdue structural reforms — specifically, the financial gap law and the banking sector restructuring law. 

Both are expected to be passed by Parliament before the end of summer, ahead of a planned visit by an International Monetary Fund (IMF) delegation to Beirut.

The talks have also included pending appointments for BDL vice governors and the Banking Control Commission — positions that require urgent action.