Proposed Financial Regulation and Deposit Recovery Law: Analysis & Critique
- Introduction
Six years have passed since the blow up of the financial crisis and is now in its seventh year, and still there is no resolution for the banking sector and depositors’ money. Several plans were prepared and discussed without any result. In December 2025, the government adopted the law after at least eight plans were prepared but not adopted since late 2019.
As per the law adopted, the purpose is to put a deposit repayment schedule based on depositors’ categories and needed liquidity, restoring balance and solvency to the banking system including the Central Bank (BDL). Additionally, cleansing of the irregularities (non-performing assets) at the level of banks operating in Lebanon, at the BDL, and at the level of depositors in these banks, and determining government’s duties towards BDL and its restructuring.
This law will be implemented, if enacted, on Lebanese treasury, BDL, and commercial banks operating in Lebanon and listed on banks’ list at BDL, in addition to all deposits at BDL and commercial banks prior to 17/10/2019 or after. However, in the prior draft that was discussed in the Council of Ministers (COM), only foreign currency deposits that were accumulated before 17/10/2019 only were the subject of this law. The new version also stated that there are no restrictions on fresh money deposited after 17/10/2019. In this spotlight, we will be discussing the main points in the law, International Monetary Fund’s (IMF) remarks on this law as well as BDL’s response to these remarks, in addition to Association of Banks in Lebanon’s point of view. Finally, we will present the pros and cons of this law.
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