The Central Bank of Lebanon is studying a mechanism to pay off suspended accounts funds

Lebanon’s central bank said late on Sunday that it was studying a mechanism to disburse money from depositors whose accounts have been frozen since 2019.

The bank said late yesterday that it was in talks with local banks to put in place a system that would enable depositors to spend $ 25,000 of their money in installments. Read also The historic collapse of the Lebanese pound … 5 questions and answers The price of the pound between banks and the black market … confusion exacerbating the suffering of the Lebanese people German companies enter Lebanon on the port reconstruction line … Investment incentives or political messages from Europe?Lebanon: the collapse of the banking sector and the continuing deterioration of the living situation

He added in a statement that “these sums will be paid in installments within a period of time to be determined by the Central Bank of Lebanon soon. It is expected that the payment will start on June 30, 2021, on condition of obtaining legal coverage.”

In the past, Lebanese banks were among the most profitable banks in the world, as they used to transfer money from the Lebanese diaspora to the state coffers in exchange for high interest rates.

However, with the intensification of the economic collapse in Lebanon and the depletion of dollar transfers from abroad, the financial system began to run out of liquidity.

Banks have frozen customer deposits and have prevented the transfer of cash abroad since the start of the financial crisis in late 2019.

Some depositors have filed legal cases, accusing banks of negligence and fraud, amid fears of wasting their savings.

The banks have denied wrongdoing and have repeatedly emphasized that the deposits are safe.

The central bank said that the new payment system will apply to deposits in all currencies dating back to before October 2019 and as they became on March 31, 2021.

Capital Control Act

A source in the Banque du Liban told AFP that what is meant by legal coverage is “the Parliament’s adoption of the Capital Control Law,” meaning capital control.

After Lebanese banks gradually lowered the ceiling for cash withdrawals in dollars and prevented transfers abroad, starting from March 2020, they stopped withdrawals in foreign currencies.

Holders of dollar deposits can only make a cash withdrawal by converting it into Lebanese pounds at an exchange rate much lower than that traded on the black market.

Currently, the dollar exchange rate on the black market exceeds 12 thousand and 500 pounds, while the exchange rate in banks is 3900 pounds, noting that the official exchange rate is 1507 pounds.

The socio-economic conditions in Lebanon have been deteriorating since August 2020, and more than 50% of the Lebanese people are below the poverty line, while the inflation rate has exceeded 140% in 2020.