Lebanese central bank governor Riad Salameh said on Monday bank deposits are secure and it had the capabilities to preserve the stability of the exchange rate of the pegged Lebanese pound.
In a televised news conference, Salameh said the central bank had taken measures to safeguard deposits. Capital controls were not on the table because Lebanon depended on free movement of money, he added.
“A haircut is not on the table,” said Salameh, adding that Lebanon was passing through “exceptional circumstances” and a historic phase.
Salameh said the central bank was allowing banks to borrow dollars without limits to secure depositors’ needs on condition such funds were not transferred abroad.
“If there are no dollars in the market, then we don’t have an economy” Salameh said, adding that a mechanism has been put in place to protect depositors and banks.
Already in deep economic crisis, Lebanon has been plunged deeper into turmoil since Oct. 17 when an unprecedented wave of protests erupted across the country and prompted the resignation of Prime Minister Saad al-Hariri.
Salameh said the central bank hoped for the formation of a new government as soon as possible. The central bank would seek to bring down interest rates through liquidity management measures, he added.
Referring to restrictions imposed by commercial banks since they reopened from a two-week closure, Salameh said the central bank had also asked banks to review these.