Circular 158 is considered an illegal capital control on people’s deposits

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02/07/2021

To the Association of Banks in Lebanon:

As we enter the month of July in the year 2021 you are about to commence the application of circular 158. This circular is supposed to allow depositors of foreign currency accounts to withdraw 400 dollars in cash and 400 dollars in equivalent Lebanese pounds according to the exchange rate of the “sairafa” platform which is set at 12000 LBPS. Half of the amount can be withdrawn in cash. The other half is by a card that is no longer accepted as a means of payment in most shops and businesses unless you open a special account for depositors who decide to submit to the provisions of this circular. It is rather a new heresy that is closer to a form of fraud with a legal cover.

By this action, you are exercising illegal Capital Controls on deposits and applying a haircut on their value. The first is by limiting withdrawals from accounts and imposing amounts that are not sufficient for basic living in Lebanon. The second is by causing a loss of at least 40% to depositors while you give them a small part of their life savings at an artificial exchange rate. This adds to hyperinflation and wastes people’s savings and money.

Let us remind the members of the Association of Banks that depositors kept their deposits in foreign currency due to their complete lack of confidence in the local currency and corrupt policymakers. This was in spite of the false assurances issued by the Central Bank of Lebanon in collusion with the banks you represent. All of you deceived people for years and fabricated solidity, success and cleanliness in fallacious transactions that led to the massive and quick collapse we are now experiencing.

Accordingly, given the catastrophic failure of banks, their disarray, their infringement of all banking laws and regulations, their attempts to hang this failure on deposit holders and inflict losses on depositors that have nothing to do with them and given the scattered circulars of the Central Bank of Lebanon and the absence of a comprehensive national plan that leaves depositors, hostage, to discretionary practices by you under the cover of the Central Bank and the government, we demand the following:

1- do not propose contracts to depositors that are tantamount to contracts of submission and ask them to sign such contracts within a short period of time while they are unable to read them and present them to legal specialists. Stop imposing conditions that are veering on the impossible, as if the depositor is forced to hand over his money to the bank.

2- allow all depositors without discriminating between them and their accounts to withdraw from their deposits in the currency in which they were lodged and without any conditions or restrictions.

3- do not open new side accounts with new and arbitrary conditions.

4- do not add commissions to withdrawals under different and unreal pretexts.

5- do not close the bank accounts of depositors since this leads to the financial exclusion of many of them.

6- refrain from exercising discretion against depositors and abide by the monetary and credit law and the law of obligations and contracts in terms of deposit contracts and banking regulations.

7- last but not least, after 18 months of defending this just and noble cause on behalf of depositors, in particular, and the Lebanese people in general we will continue to pursue your banks by all legal means until we liberate people’s life from your financial tyranny. We will continue to hold you responsible due to the indecent sums that you earned through the policies adopted by the Central Bank. All this was at the expense of the State, the people and depositors.

We will continue this fight until our last breath and until we will arrive at a just solution and be sure to have a society for everyone where justice and economic growth walk hand in hand.

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