Lately, there seems to be a serious discussion, if not outright pressure, that BDL should use its foreign exchange (FX) reserves, even liquidate its Gold holdings, to pay for the living expenses of the internal refugees that were displaced as a result of the current war between Hezbollah and Israel. Of course, from a humanitarian perspective, this is perhaps a fair request. But from a legal and institutional perspective, this is a no-starter: BDL’s mandate is to ensure monetary and exchange rate stability, not to act as a treasury or cash register for the Government. Technically, also, in the context of the Lebanese crisis, BDL FX reserves belong to depositors, so even from a fairness point of view, spending them on the refugees comes at the expense of depositors’ rightful claims on these reserves.
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How Disposable are BDL’s Foreign Exchange Reserves.doc