BEIRUT: Lebanon’s Central Bank governing body will lack a quorum as of the end of March if the government fails to meet before then to renew the term of Governor Riad Salameh’s four deputies or appoint their successors.
The Central Council is formed of the governor as chairman and six members, including the four vice governors and the directors-general of the Finance and Economy ministries. The legal quorum requires the attendance of at least four members.
According to the Central Bank’s website, the Central Council sets monetary and credit policies, including money supply as well as discount and lending rates and decides on issues concerning the banking and financial sectors, the establishment of clearing houses, the issuing of currency and loan requests by public sector entities.
Despite the prerogatives assigned to it, the lack of a functioning Central Council will affect neither the performance of the Central Bank nor its role in shaping monetary policies, a source in the banking industry tell The Daily Star.
A paralyzed government in 2008 under former Prime Minister Fouad Siniora failed to appoint vice governors after the expiration of their term, leaving the four posts vacant for a period of eight months, however, the Central Bank carried on with most of its duties normally, the source said.
The source added that with the exception of decisions to award new bank licenses, the establishment of new branches and capital increases that require the approval of the Central Council, the executive authority is embodied in the governor who is entitled to make most decisions relating to monetary policies.
“Under the current circumstances, I really doubt that any financial institution will apply for a license to operate in Lebanon. As for the day-to-day management of the Central Bank and its monetary policies, the governor is entitled to assume these duties,” the source said.
The governor is the legal representative of the Central Bank and is entrusted with the enforcement of the Code of Money and Credit, and the implementation of the Central Council’s resolutions, according to the Central Bank website. Vice governors assist in the management of the Central Bank, carrying out functions specified by the governor on top of their duties as members of the Central Council.
“It is possible for the governor to appoint the current vice governors as his advisers if the government fails to meet before their term comes to an end. This way they can assist him in administrative tasks across the various departments within the Central Bank,” the source said.
The government has yet to pass a vote of confidence in Parliament, as ministers of the March 8 and March 14 coalitions remain deadlocked over the issue of the resistance in Cabinet’s policy statement. Prime Minister Tammam Salam has threatened to resign if the issue is not resolved.