BDLBANQUE DU LIBAN

The Banque du Liban (BDL), Lebanon's central bank, was established by the Code of Money and Credit under Decree No.13513, dated August 1, 1963.It began its official function on April 1, 1964.The BDL was granted sole authority to print the national currency and implement monetary policy from the outset.

Core Responsibilities

The BDL's mandate goes well beyond the issuance of currency; its main functions include:

• Maintaining monetary and economic stability

• Keeping the banking sector safe

• Building the money and capital markets

• Regulating payment, clearing, and settlement systems, including electronic financial transactions

The Central Bank works as a public legal entity endowed with financial and administrative independence. Its capital is state-owned, but the BDL is not directly a participant in public sector management structures, which allows it to apply monetary policies adaptively.

Monetary Policy and Financial Supervision

Over the last twenty years, the BDL has opted for a conservative banking model, aimed at fostering confidence in monetary and financial activity in Lebanon. This conservative model built confidence and secured deposits, investments, and job diversification.

As the Lebanese banks chose to maintain cash balances and avoid high-risk products, they were insulated from pseudocriminal financial crisis events, evolving into banks that served as a haven of stability amid political and economic unrest.

Monetary policy was managed by BDL using conventional and, latterly, unconventional monetary tools:

• Utilizing the foreign exchange and buying and selling currency in the open market, allowing attempts to keep the critical national Lira exchange rate relatively stable.

• Providing liquidity to the local banking system by changing the discount rate and market operation programs.

• Setting ceilings on credit, directing lending to specific sectors, and offering preferential rates.

• Require the size of reserves for deposit liabilities.

• Provide incentives to credit volumes for growth and to further economic activity.

Since 2013, BDL has launched stimulus packages with an annual estimated value of over $1 billion/year executed through the banking sector, to support private-sector growth and promote export organizations and other economic production sectors.

Sustainable Innovation and Knowledge Economy

Lebanon needs to promote the growth of knowledge economies, and the BDL instituted programs to diversify the economy.Circular Number 331, approved by BDL in 2013, aimed to provide equity financing through equity capital and loans from banks and other intended channels to promote startups and technology businesses, thereby positioning Lebanon as a growth hub for ICT innovation, creating new jobs, supplying human capital, and fostering sustainability.

Regulation of the Financial Ecosystem

The BDL regulates and licenses significant public intermediaries, including, but not limited to:

• Commercial Banks and Foreign Banks

• Brokerage and leasing

• Financial and money dealers, and Mutual Funds.

Specific supervision of the Banking Control Commission began with the SRO to operate in accordance with the financial regulatory scheme.

The BDL regulates money laundering and terrorist financing in collaboration with the Special Investigation Commission (SIC), Lebanon's Financial Intelligence Unit, which focuses on supervision, investigation, and reporting of suspicious transactions.

The Capital Markets Authority was established shortly after the BDL assumed the policy function, and commercial policies were developed, outlining Lebanon's capital markets and protecting investors from fraud, based on guiding regulations.This ensures proper supervisory engagement to secure transparency, integrity, and trust, thereby enhancing the economy's GDP growth.