Lebanon's central bank governor rules out financial collapse in Lebanon

Source: Xinhua| 2020-01-10 06:08:43|Editor: Mu Xuequan
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BEIRUT, Jan. 9 (Xinhua) -- Lebanon's Central Bank Governor Riad Salameh on Thursday ruled out imminent financial collapse in Lebanon, MTV local TV Channel reported.

Salameh said that the banks in Lebanon are solvent though facing pressure due to the decline in liquidity, assuring no Lebanese bank will go bankrupt and the banks facing difficulties will be merged.

Lebanon has witnessed in the past few months a shortage of U.S. dollars caused by economic slowdown and the drop in cash injection from Lebanese abroad, reducing the central bank's foreign currency reserves and leading to a shortage in dollar for businesses and individuals.

Hence banks put restrictions on dollar withdrawals and exchange from Lebanese pounds to dollars, creating panic among depositors who resorted to withdrawing their money and storing them at home.

Salameh attributed this crisis to the panic caused in the market by the attacks against Aramco facilities, U.S. Treasury's measures against Jammal Trust Bank, in addition to the Israeli drone that attacked Beirut southern suburbs.

Salameh said he expects liquidity in Lebanese banks to drop further because banks hold the government's Eurobonds but this liquidity will remain above the requirements of BASEL III.

"Also banks are requested to increase their capitals by a total of 4 billion U.S. dollars by June 2020 without distributing any dividends to shareholders which will secure a total of 5.5 billion U.S. dollars," he said.

Salameh promised that Lebanese banks will start removing restrictions in June.

"If we succeed to secure political coverage, we will issue a circular to ease restrictions on withdrawals and allow all clients to transfer money from Lebanon to other countries. We have a road map for that," he said.

The central bank has devised a plan under which depositors' money will be preserved, Salameh added.