BDL published today its basic circular 158 that provides binding instructions to banks to pay back gradually their customers’ foreign currency deposits. The circular applies to all accounts opened before 31/10/2019 and calculated based on the accounts as of 31/3/2021, on the condition that the accounts do not exceed those available at 31/10/201. The accounts are also calculated after netting out all claims that the banks have against their customers.
The circular requires banks to pay monthly $400 to account holders, in addition to $400 in LBP at the price of the “Sayrafa Platform” paid half as cash and half as credit. Customers who benefit from this Circular will forfeit the benefits that arise from Circular 151. In addition, customers have to open a new “special sub-account” at their banks to make use of the benefits from the Circular.
The liquidity needed to execute the Circular will be sourced equally from required reserves at BDL and from banks’ deposits with correspondent banks. And banks can use to that purpose the 3% liquidity accumulated through compliance with Circular 154. Banks can’t use “fresh money” accounts as a source of liquidity to abide by the Circular.
BDL will also establish a “Special Sub-Account” department to monitor the compliance with the Circular, and any bank that fails to comply will be penalized according to article 208 of the Code of Money and Credit.
The Circular will be effective starting 30/6/2021, and will be applicable for one year subject to renewal. It is expected that on an annual basis payments by banks will total close to $2.4 billion, the money stock will rise by 26 trillion LBP, and 800,000 accounts will be settled constituting 70% of account holders. Also, legal reserve requirements on foreign currency deposits will fall by 1% to 14%.