Central Bank of Lebanon governor supports the draft financial stability and deposit repayment law while urging binding state commitments and protections for bank capital

The Central Bank of Lebanon’s governor published a position statement on the government’s draft Financial Stability and Deposit Repayment (FSDR) law, backing its overall framework while calling for refinements to strengthen fairness, credibility and practical implementability. The statement follows formal consultation with the governor under the Monetary and Credit Law and his participation in the ministerial committee that prepared the draft. Support was expressed for key pillars including the removal of “irregular claims” to reduce the fiscal deficit, clear categorisation of deposits (small, large and very large), phased repayment using a mix of cash and asset-backed financial instruments within available liquidity, and burden-sharing between the state, the Central Bank of Lebanon and commercial banks. The governor argued that the draft needs clearer and more enforceable provisions on the state’s obligations, with an explicit, measurable and legally binding contribution tied to a reliable timetable, and noted the proposed timeline for cash repayment is somewhat ambitious and may need adjustment to ensure continuity of payments without undermining depositors’ rights. He also raised serious reservations about approaches that would systematically deplete or fully cancel banks’ private capital before removing irregular claims and applying the subsequent creditor hierarchy, warning this could harm depositors and weaken credit intermediation. The governor recommended that the Council of Ministers carry out a detailed and constructive review to introduce necessary improvements before referring the bill to parliament.