Lebanon Central Bank Governor Highlights Strong Monetary Position

Asharq Al-Awsat

May 16, 2017

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Beirut – The Lebanese government will extend Central Bank Governor Riad Salameh’s term, which was due to expire this summer, a governmental source told Asharq Al-Awsat.

The source said that during a cabinet session on Tuesday, Lebanese ministers would renew, for the sixth time, the governor’s term until 2023, in a measure aimed at reassuring the Lebanese banking sector, which regards Salameh as the guarantor of Lebanon’s monetary position.

A well-informed Lebanese source said that Finance Minister Ali Hassan Khalil has sent a letter to the Cabinet, asking for the extension of the term of the governor of “Banque du Liban” by six years.

Salameh was first assigned to this post in 1993 under the government of late Prime Minister Rafik al-Hariri.

The sources also noted that the finance minister referred the extension request to the cabinet, after overcoming previous objections by President Michel Aoun, who was calling for the appointment a new governor.

A senior banker, speaking on condition of anonymity, told Asharq Al-Awsat that, based on the need to preserve the safety of Lebanon’s monetary sector and to “prevent adventures into the unknown”, an agreement was reached to renew Salameh’s tenure.

Meanwhile, in an interview with Reuters published in February, the Central Bank governor said that Lebanon has met all the conditions set by FATF-GAFI (Financial Action Task Force) for fighting money laundering and was no longer subject to country follow-up.

FATF reported at a plenary meeting held in Paris in February that Lebanon has, legally and in practice, met all the required conditions to combat money laundering and terrorist financing.

According to Salameh, the FATF statement, issued by its 199 member states, is a reassuring factor for Lebanon’s international banking and financial dealings, and for Lebanese banks’ customers, particularly the Lebanese diaspora, as it facilitates their incoming and outgoing transfers to and from Lebanon.

Speaking to Reuters on the sidelines of a Euromoney conference in Beirut on Monday, the Central Bank governor said: “Today we have a situation that is stable, which doesn’t warrant any special operations.”

“Depending on what would be necessary, we have various strategies we can implement; it is not essential that we go back to the same strategy we used in 2016,” he added, as quoted by Reuters.

Between June and August, the Central Bank exchanged some of its Lebanese pound-denominated debt holdings for dollar-denominated Finance Ministry Eurobonds, while private banks transferred in dollars and were given the Eurobonds and newly issued dollar certificates of deposit in exchange.

Reuters added that the Central Bank also bought pound-denominated bonds held on local banks’ books for the full principal amount plus interest up to maturity, instantly boosting local currency reserves.

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