Banque du Liban (BDL)

Overview

The Banque du Liban (BDL) is the central bank and primary monetary authority of Lebanon, established in 1997. Content for this section is being enriched from official sources. The Banque du Liban (BDL) in Lebanon has regulatory functions documented in adjacent sections of this profile.

Basic Identity

Classification

Inclusion Justification

What This Entity Oversees

Central Bank of Lebanon

Overview

The Banque du Liban (BDL), established on 1 August 1963 under Decree No. 13513 and operationalized on 1 April 1964, serves as Lebanon's central bank. BDL is a legal public entity enjoying financial and administrative autonomy and operates independently from standard public sector administrative controls.

Current Leadership (Post-Salamé Era):

• Governor: Karim A. Souaid (appointed March 2025)
• Interim Period: Wassim Mansouri served as interim governor following Riad Salameh's departure in July 2023
• Previous Governor: Riad Salameh (August 1993 – July 2023), whose tenure was marked by significant controversy. A forensic audit revealed years of misconduct, and Salameh was arrested on September 3, 2024, following judicial interrogation

Context: The institution operates within Lebanon's severe financial crisis context, characterized by currency collapse, dollarization, and systemic banking dysfunction.

Legal Basis

Governing Framework:

• Code of Money and Credit (1963): Promulgated as the primary legislative foundation, comprising six chapters:

1. Money
2. Central Bank
3. Banking Regulations
4. Sanctions
5. Transitory Provisions
6. Miscellaneous and Final Provisions

The Code of Money and Credit establishes BDL's authority over monetary policy, banking supervision, payment systems, and foreign exchange management.

Monetary Policy

Multiple Exchange Rate System (2024-2025):

Lebanon operates under a complex, multi-rate foreign exchange regime reflecting the ongoing economic crisis:

• Official Rate: 89,500 LBP/USD (fixed as of February 2024)
• Sayrafa Rate: Platform-based market rate with limited institutional use (dismantled 2024)
• Parallel/Black Market Rate: Significantly diverges from official rate, reaching 141,000 LBP/USD in March 2023 before stabilizing around 89,700 LBP/USD by April 2024
• Current Stabilization (2025): Lebanese Pound stabilized at approximately 89,000 LBP/USD without inflationary pressure

Currency Depreciation:

• Lost >98.3% of pre-crisis value by July 2023
• Pegged to USD at 1507.5:1 from 1997-2023
• Crisis onset: August 2019, accelerating through 2022-2023

Monetary Policy Tools:

• Traditional open market operations constrained by liquidity crisis
• Limited policy autonomy due to systemic capital controls and banking sector dysfunction
• Focus on stabilization rather than traditional growth objectives

Banking Supervision

Banking Control Commission of Lebanon (BCCL):

Established under Law No. 28/67 (dated 9 May 1967), the BCCL functions as Lebanon's supervisory authority for:

• Licensed commercial banks
• Financial institutions
• Foreign exchange institutions
• Credit counters
• Electronic cash transfer companies

Mission:

• Maintain safety and soundness of supervised institutions
• Safeguard depositor interests
• Enforce prudential regulations and conduct of business standards

Supervision Framework:

• Prudential regulation and capital adequacy requirements
• Compliance monitoring and inspection regimes
• Anti-money laundering and counter-terrorist financing oversight
• Resolution and enforcement authority

Payment Systems

Domestic Payment Infrastructure:

BDL operates and oversees Lebanon's payment settlement systems, including:

• Wire transfer systems
• Cheque clearing mechanisms
• Electronic fund transfer networks
• Settlement mechanisms for banking sector transactions

Challenges (Crisis-Related):

• Severe liquidity constraints limiting effective payment system operation
• Capital controls restricting cross-border payment flows
• Banking sector paralysis affecting remittance corridors
• Dollar shortage creating barriers to payment processing

Regulatory Framework:

• Payment system safety and efficiency oversight
• System participant licensing and operational standards
• Settlement finality and risk management requirements

Foreign Exchange Regulation

Regulatory Structure:

BDL manages Lebanon's foreign exchange system through multiple regulatory tools:

Official Channels:

• Central bank-administered exchange rate pegged to USD
• Commercial bank foreign exchange trading authorizations
• Import-linked foreign currency allocation mechanisms

Market Realities:

• Parallel/grey market operations substantially exceed official channel volumes
• Dollarization of economy reducing LBP transaction usage
• Informal money transfer operators (hawala-like systems) circumventing banking channels
• Significant arbitrage between official and parallel rates creating evasion incentives

Crisis Management Measures:

• Capital controls restricting deposit withdrawals and transfers
• Informal deposit "haircuts" (confiscation) implemented by banking system
• Preferential foreign currency allocation to select depositors
• Import financing restrictions linked to foreign exchange availability

Exchange Rate Policy Objectives:

• Stabilization of parallel market rate
• Reduction of arbitrage opportunities
• Restoration of institutional confidence in banking system
• IMF agreement compliance regarding FX regime

AML/CFT Framework

Competent Authority:

• Special Investigation Commission (SIC): Primary AML/CFT investigative body
• Banking Control Commission: AML/CFT compliance supervision of financial institutions
• BDL Coordination: Central bank policy leadership on sanctions and STR processing

Legal Basis:

• International Financial Action Task Force (FATF) recommendations implementation
• UN Security Council sanctions resolution compliance
• Lebanese Money Laundering Law and related regulations

Obligations:

• Suspicious transaction reporting (STR) to SIC
• Customer due diligence (CDD) and Know Your Customer (KYC) requirements
• Enhanced due diligence for high-risk jurisdictions
• Beneficial ownership identification requirements
• Correspondent banking relationship monitoring

Challenges:

• Banking sector insolvency reducing institutional capacity for compliance
• Informal economy scale limiting regulatory reach
• Capital control evasion through informal channels
• Sanctions evasion risks related to Syria and Iranian activities

Financial Crisis Impact

Systemic Designation:

Lebanon is currently experiencing what economists classify as a financial system collapse, with the following characteristics:

Banking Sector:

• De facto insolvency of major commercial banks
• Deposit confiscation ("banking haircut") affecting all depositors
• Inability to process payment transactions at normal volumes
• Foreign currency shortage creating USD/LBP divergence
• Non-resident account restrictions

Currency and Liquidity:

• Severe dollar shortage despite central bank reserves
• Unofficial economy dollarization (>80% of transactions)
• Capital controls preventing normal financial flows
• Black market premium reaching 50-70%

Credit Contraction:

• Minimal new lending to private sector
• Working capital constraints across economy
• Trade finance collapse
• Remittance corridor dysfunction

Sovereign Debt:

• Large defaulted Eurobond positions
• IMF negotiations for restructuring programme
• Multi-year negotiations for depositor protection mechanisms

Enforcement Actions

Regulatory Enforcement (Post-Crisis):

Central Bank Actions:

• Bank licensing suspensions and revocations
• Management removal orders for non-compliant institutions
• Corrective action programmes for undercapitalized banks
• Anti-money laundering compliance orders
• Foreign exchange violation penalties

Sanctions Enforcement:

• Terrorist financing designation compliance
• Iran sanctions implementation (Syria-related banking)
• North Korea sanctions screening
• Proliferation financing controls

Recent High-Profile Cases:

• Riad Salameh arrest (September 2024) – former governor charged with financial misconduct, embezzlement, and illicit commissions
• Banking sector transparency investigations
• Forensic audits revealing past misconduct ($111 million illegitimate commissions identified)

International Relations

IMF Engagement:

Lebanon is actively engaged with the International Monetary Fund on:

• Extended Fund Facility (EFF) programme negotiations (ongoing)
• Technical assistance on monetary policy framework
• Capital control liberalization sequencing
• Banking sector restructuring guidance
• AML/CFT compliance improvements

BIS Participation:

• Member of Bank for International Settlements
• Participation in CPMI payment systems initiatives
• Financial stability information sharing
• Central bank technical cooperation

Bilateral Central Bank Relations:

• US Federal Reserve coordination on sanctions enforcement
• ECB dialogue on foreign exchange regime
• Saudi Monetary Authority (SAMA) coordination on regional stability
• Coordination with other Arab central banks through AACBBR

Contacts

Banque du Liban Headquarters:

• Address: Hamra, Beirut, Lebanon
• Website: www.bdl.gov.lb
• Governor's Office: Karim A. Souaid (Appointed March 2025)
• Communications: BDL maintains limited public-facing functions due to crisis

Banking Control Commission of Lebanon:

• Website: bccl.gov.lb
• Supervision Inquiries: Available through official portal

Key Personnel (As of 2025):

• Governor: Karim A. Souaid
• Deputy Governors: [Positions under restructuring]

Sources

Regulatory Powers

This entity exercises the following regulatory powers as the central monetary authority:

Regulatory Role and Function

Legal Foundation

Established by primary legislation (Central Bank Act or equivalent enabling statute) enacted by the national legislature. Operates under a statutory mandate that defines its objectives, powers, governance structure, and relationship with government. The legal framework typically provides for operational independence in monetary policy while maintaining accountability to the legislature.

Licensing and Authorization Relevance

The Banque du Liban (BDL) is a key licensing authority in Lebanon's financial system:

The licensing process typically involves assessment of capital adequacy, fitness and propriety of management, business plan viability, AML/CFT compliance frameworks, and IT systems readiness.

Payments and Money Movement Relevance

The Banque du Liban (BDL) plays a central role in Lebanon's payment ecosystem:

Payment Systems Governed or Overseen

The BDL operates and/or oversees the national payment and settlement infrastructure of Lebanon. The BDL is actively modernizing electronic payment service provider regulation and money transfer system oversight.

Electronic Payment Services Regulation (2026 Modernization)

Recent Development - January 2026:

The Banque du Liban issued a comprehensive circular substantially modernizing regulations applied to electronic payment service providers (wallet operators) and money transfer companies.

Regulatory Framework:

• Legislative Basis: Basic Decision No. 13790
• Scope: Establishes clear legal and regulatory framework for electronic payment services
• Compliance Timeline: 6 months from issuance for operators to adjust and achieve compliance

Key Regulatory Objectives:

• Establish comprehensive legal framework for digital payment services
• Strengthen compliance with BDL standards and requirements
• Protect rights and interests of users and consumers
• Modernize oversight of fintech and digital payment providers

Coverage: Electronic wallet operators, money transfer companies, and alternative payment service providers

Source: Lebanon - Money transfers regulation overhaul (L'Orient Today)

BDL's Payment Systems Regulatory Authority

Statutory Mandate:

The BDL's missions include:

• Development and regulation of payment systems and instruments
• Development and regulation of money transfer operations including electronic transfers
• Oversight of financial system stability related to payment infrastructure
• Licensing and supervision of payment service providers

Digital Currency Development

The BDL is exploring:

• Digital Lebanese Pound (LBP): Central Bank Digital Currency research and development
• Digital currency infrastructure for potential implementation
• Enhanced payment system modernization

Status: Preparation underway to launch digital currency in LBP to facilitate payments

Source: Lebanon Prepares to Launch Digital Currency in LBP

Relationship to Other Regulators

The Banque du Liban (BDL) operates within Lebanon's broader financial regulatory architecture and maintains relationships with:

Geography and Jurisdiction Notes

Important Departments and Divisions

Key Public Resources

Notes on Naming and Language