Banque du Liban

Banque du Liban, commonly abbreviated as BDL, is the central bank of Lebanon. It was created by the Code of Money and Credit promulgated on 1 August 1963 and began effective operations on 1 April 1964. The institution is a public legal entity with financial and administrative autonomy, while its capital is wholly owned by the Lebanese state. Its central mandate is to safeguard monetary and financial stability and to manage core functions of the national currency and banking system. BDL issues and withdraws Lebanese-pound banknotes and coins, manages monetary and credit policy, and participates in maintaining the stability of the Lebanese financial system. Its responsibilities include setting or influencing interest-rate and liquidity conditions, regulating money transfers, supervising banks and other regulated financial institutions, supporting payment and clearing arrangements, and contributing to the soundness of the banking sector. The bank also has responsibilities connected with foreign-exchange management, financial-market oversight, anti-money-laundering controls, and the administration of banking-sector rules under Lebanon’s monetary and banking legislation. The bank’s institutional background reaches back to the monetary arrangements established during the French Mandate. After the First World War, Egyptian currency circulated in the Levant under British control. French authorities subsequently introduced a Syrian-Lebanese currency framework, and the Banque de Syrie et du Liban received the concession to issue the currency. Its issuing department provided the institutional and operational precedent for the later creation of Banque du Liban. BDL is governed by a Governor, four vice governors, and a Central Council. The Governor represents the institution legally and is responsible for implementing the Code of Money and Credit and the Central Council’s resolutions. The Central Council determines monetary and credit policy, considers banking and financial-sector matters, approves relevant operational rules, and decides on the bank’s budget and accounts. The Governor is appointed by decree of the Council of Ministers on the proposal of the Minister of Finance for a renewable six-year term; vice governors are appointed for renewable five-year terms. The bank’s regulatory perimeter extends beyond conventional central-bank operations. The Governor chairs the Capital Markets Authority, which regulates capital-market institutions, securities-market arrangements, investment intermediation, disclosure, securitization, and related conduct standards. BDL also hosts or works closely with Lebanon’s Special Investigation Commission, the country’s financial-intelligence unit for anti-money-laundering and counter-terrorist-financing purposes. The commission receives and analyzes suspicious-transaction reports, can freeze accounts or transactions and lift banking secrecy within its legal mandate, and cooperates with domestic and foreign authorities. BDL has maintained a presence beyond its Beirut headquarters through branches in Aley, Baalbeck, Bikfaya, Jounieh, Nabatiye, Sidon, Tripoli, Tyre, and Zahlé. It has also held important investments and ownership interests outside conventional monetary operations. The bank owns a controlling interest in the Intra Investment Company, which in turn holds a majority stake in Casino du Liban, and it has historically owned an overwhelming shareholding in Middle East Airlines, Lebanon’s national carrier. These holdings have made BDL an unusually prominent participant in the wider Lebanese public-enterprise and financial landscape. From the 2010s onward, the bank also used regulatory and quasi-financial initiatives to encourage investment in Lebanon’s technology and knowledge economy. Circular No. 331, issued in 2013, encouraged commercial banks to invest in qualifying startups and offered a central-bank guarantee covering a substantial portion of eligible investments. The program helped channel capital toward venture funds, incubators, and technology companies, but it was also criticized for limited transparency and for failing to overcome the banking sector’s conservative investment culture. BDL became the focus of intense domestic and international scrutiny during Lebanon’s financial and sovereign-debt crisis. The collapse of the pound’s long-standing exchange-rate regime, restrictions on deposit access, losses in the banking system, and questions about central-bank financial reporting and extraordinary financial-engineering operations generated extensive criticism. Former Governor Riad Salamé faced investigations and legal actions in Lebanon and several European jurisdictions concerning alleged financial misconduct; he has denied wrongdoing. Because the institution’s governance and financial position remain linked to Lebanon’s broader restructuring process, BDL’s current status should be read together with developments in the country’s banking, fiscal, and sovereign-debt crisis.

The institutional origins of Banque du Liban lie in the monetary disruption that followed the end of Ottoman rule in the Levant. During and after the First World War, Egyptian currency circulated in areas administered by British authorities. The transition to French control created a need for a different currency arrangement, particularly as the French franc weakened and the earlier sterling-linked system became unsuitable for the new political and administrative environment. In 1920, after the proclamation of Greater Lebanon, the French-controlled Banque de Syrie et du Liban received a concession to issue a Syrian-Lebanese currency. Its notes became legal tender and were supported by foreign exchange, foreign securities, and credits associated with the French Treasury. An independent issuing department within the bank was responsible for putting notes into circulation and withdrawing them. This issuing department provided the administrative and technical foundation for a later national currency authority. Lebanon’s modern central bank was established by the Code of Money and Credit, promulgated on 1 August 1963 by decree no. 13513. Banque du Liban became effectively operational on 1 April 1964. The law gave it public legal personality and financial and administrative autonomy. Unlike an ordinary ministry, it was not placed under the full set of administrative and management controls applicable to the public sector, although its capital remained entirely appropriated by the Lebanese state. The bank’s core functions developed around the Lebanese pound, monetary stability, and the banking system. BDL became the institution responsible for issuing national currency, influencing money supply and credit conditions, regulating money transfers, and supporting the soundness of banks and other financial institutions. Its role was particularly significant because banking became one of the most important sectors of Lebanon’s economy and the country developed a large and diverse commercial-banking population. The governance model established by the monetary legislation centers on the Governor, four vice governors, and the Central Council. The Governor is the legal representative of BDL and implements the monetary code and Central Council decisions. The council sets monetary and credit policies, deals with lending and discount rates, considers banking-sector and clearing-house matters, reviews currency issuance, and approves internal rules, budgets, and accounts. The Governor is appointed by the Council of Ministers for a renewable six-year term on the recommendation of the Minister of Finance, while vice governors serve renewable five-year terms. BDL’s responsibilities expanded into specialized forms of financial regulation. The Capital Markets Authority, created under Law 161/2011, is chaired by the Governor and is responsible for important aspects of securities-market governance, investment intermediation, disclosure, securitization, and investor protection. The Special Investigation Commission operates as Lebanon’s financial-intelligence unit and has judicial status. It receives suspicious-transaction reports, conducts financial investigations, cooperates internationally, and can take measures such as freezing assets or lifting banking secrecy within the authority provided by law. The Higher Banking Commission, established at BDL in 1967, provides another institutional mechanism for dealing with banking-sector matters. BDL also became involved in economic-development policy. Circular No. 331, issued on 22 August 2013, sought to encourage commercial banks to invest in Lebanese knowledge-economy startups. The framework allowed qualifying investments to receive a central-bank guarantee covering up to 75 percent of their value, subject to limits on a bank’s aggregate and individual exposure. Venture funds, incubators, and technology companies benefited from the initiative’s ecosystem, but observers questioned its transparency and measurable economic results. The program also faced the broader difficulty of encouraging risk capital in a banking sector traditionally inclined toward conservative investments. The bank’s ownership interests have made its role broader than that of many central banks. Through its stake in the Intra Investment Company, BDL has been linked to control of Casino du Liban. It has also owned 99.37 percent of Middle East Airlines, giving it a major role in the country’s national airline. These holdings reflect the wider institutional and financial arrangements through which Lebanon’s public sector has historically managed strategic assets. The most consequential period in the bank’s recent history began with Lebanon’s financial and sovereign crisis. From 2019, the Lebanese pound suffered severe depreciation, banks imposed informal and then formal restrictions on deposits, and the state and banking system faced large losses. BDL’s exchange-rate policies, financial-engineering operations, foreign-currency management, and accounting disclosures became subjects of intense public and legal controversy. Riad Salamé, governor from 1993 to 2023, became the target of investigations in Lebanon and abroad involving allegations of illicit enrichment, embezzlement, money laundering, and related financial misconduct. Allegations and proceedings have not established every claim as fact, and Salamé has denied wrongdoing, but the controversy materially affected perceptions of BDL and Lebanon’s financial governance. After the end of Salamé’s tenure, BDL remained central to efforts to stabilize the currency, preserve payment and banking functions, and determine how losses would be allocated among the state, banks, the central bank, and depositors. Its future role depends on institutional reforms, banking-sector restructuring, fiscal stabilization, and the restoration of confidence in Lebanon’s monetary and financial authorities.

• 2023

  Riad Salamé’s governorship ends

  [2]Riad Salamehen.wikipedia.org

  Salamé left office after three decades as governor amid the Lebanese financial crisis and investigations concerning alleged financial misconduct.

• 2019

  Lebanese financial crisis begins

  [3]Lebanese liquidity crisisen.wikipedia.org

  The financial crisis sharply increased pressure on BDL’s exchange-rate policy, banking supervision, liquidity management, and public accountability.

• 2013

  Circular No. 331 issued

  [1]Banque du Libanen.wikipedia.org

  BDL introduced a startup-investment support framework designed to encourage bank financing of Lebanon’s knowledge economy.

• 2011

  Capital Markets Authority framework adopted

  [1]Banque du Libanen.wikipedia.org

  Law 161/2011 assigned the Capital Markets Authority responsibilities for capital-market regulation, conduct, disclosure, and investor protection.

• 1967

  Higher Banking Commission established

  [1]Banque du Libanen.wikipedia.org

  The Higher Banking Commission was established at BDL under Law No. 28/67.

• 1964

  Operations commence

  [1]Banque du Libanen.wikipedia.org

  Banque du Liban began effective operations on 1 April 1964.

• 1963

  Banque du Liban created by monetary legislation

  [1]Banque du Libanen.wikipedia.org

  The Code of Money and Credit was promulgated on 1 August 1963, establishing Lebanon’s central bank as an autonomous public legal entity.

• 1920

  Syrian-Lebanese currency framework established

  [1]Banque du Libanen.wikipedia.org

  The Banque de Syrie et du Liban received a concession to issue a Syrian-Lebanese currency under the French Mandate. Its issuing department later provided an institutional precedent for Banque du Liban.

Lebanon’s sovereign monetary authority and central bank, combining currency issuance, monetary policy, financial regulation, banking supervision, and financial-intelligence functions.

• Currency issuance · 1964

  Lebanese pound currency

  BDL is responsible for issuing, managing, and withdrawing Lebanon’s legal-tender banknotes and coins. Currency operations are a foundational part of its mandate and are connected to monetary policy, foreign-exchange management, and the stability of the domestic payments system.

• Central-bank operations · 1964

  Monetary and credit facilities

  The bank uses monetary and credit instruments to influence liquidity, interest-rate conditions, and the availability of financing in Lebanon. The Central Council determines relevant policy and considers discounting, lending, money supply, and public-sector credit matters.

• Financial regulation · 1964

  Banking supervision and regulation

  BDL oversees important aspects of Lebanon’s banking and financial system under the Code of Money and Credit and related regulations. Its remit includes institutional soundness, money transfers, banking-sector rules, and cooperation with specialized supervisory and investigative bodies.

• Capital-markets regulation · 2011

  Capital Markets Authority oversight

  Through the Capital Markets Authority, chaired by the BDL Governor, Lebanon regulates stock exchanges, financial intermediaries, investment funds, disclosure, securitization, and conduct standards for capital-market participants.

• Startup-finance support · 2013

  Circular No. 331

  Circular No. 331 encouraged commercial banks to invest in eligible Lebanese startups, especially knowledge-economy and technology businesses. BDL could guarantee up to 75 percent of qualifying investments, subject to portfolio and single-investment limits.

• Financial integrity services · 2001

  Financial-intelligence and AML/CFT functions

  The Special Investigation Commission associated with BDL receives suspicious-transaction reports, performs financial investigations, supports asset-freezing actions, addresses money laundering and terrorist financing, and exchanges intelligence with domestic and international counterparts.

• 2020

  Investigations involving Riad Salamé

  Lebanese and foreign authorities investigated allegations involving former Governor Riad Salamé, including alleged illicit enrichment, embezzlement, and money laundering. Salamé denied wrongdoing; the existence of investigations should not be treated as proof of the allegations.

  Source

• 2019

  Central-bank conduct during Lebanon’s financial crisis

  BDL’s exchange-rate management, financial-engineering operations, banking-sector support, and disclosures became subjects of intense criticism after Lebanon’s financial system entered crisis. The controversy concerned the distribution and recognition of losses and the effects on depositors, banks, and the state.

  Source

Read more

• 2013Circular No. 331 startup ecosystem initiative

  Lebanon

  BDL promoted investment in Lebanese technology and knowledge-economy startups by encouraging banks to invest in qualifying companies and venture funds with partial central-bank guarantees.

  Outcome. The initiative helped attract attention and capital to Lebanon’s startup ecosystem, but observers criticized its transparency and questioned its measurable impact on jobs, funding, and broader economic growth.

  Source

• 2019

  Crisis-era monetary and banking interventionsStrategy

  Background

  Capital outflows, sovereign stress, and a shortage of foreign currency placed the fixed or managed exchange-rate regime and the banking system under severe pressure.

  Action taken

  BDL used monetary, liquidity, foreign-exchange, and banking-sector measures to manage the crisis, while banks imposed increasingly restrictive access to deposits.

  Aftermath

  The Lebanese pound depreciated sharply, confidence in the financial system deteriorated, and BDL became central to disputes over losses, accountability, and restructuring.

  Source

• 2013

  Launch of Circular No. 331Strategy

  Background

  Lebanon sought to develop a technology and knowledge economy while commercial banks remained highly cautious about venture investment.

  Action taken

  BDL encouraged banks to invest in qualifying startups and offered guarantees covering up to 75 percent of eligible investments, subject to regulatory limits.

  Aftermath

  The policy supported venture funds and incubators but attracted criticism over transparency and limited evidence of economy-wide results.

  Source

1. 1Banque du Libanen.wikipedia.org
2. 2Riad Salamehen.wikipedia.org
3. 3Lebanese liquidity crisisen.wikipedia.org