BEIRUT: The Capital Market Authority will issue licenses for the launch of online stock and currency trading, Central Bank Governor Riad Salameh said Wednesday.
“The CMA will authorize the launching of an electronic market for digital trading of stocks, currencies, commodities and bonds, with the participation of banks, financial institutions and brokerage firms. Med Clear will supervise the settlements and clearance,” Salameh told participants in an economic conference organized by the Union of Arab Banks at the Phoenicia Hotel.
The CMA is an independent, autonomous regulatory body established by the Capital Markets Law in 2011. It was set up to regulate and organize financial firms and capital markets in Lebanon.
Salameh said this electronic exchange can be run from the Beirut Stock Exchange if the government privatizes the bourse according to the law.
“If this does not happen, the online bourse will be independent and owned by the private sector,” the governor explained. He added that the purpose of this online bourse is to provide liquidity for small- and medium-size businesses.
At present, there are 10 banks and firms listed on the BSE with a total market capitalization of less than $12 billion.
The average volume and value of trading on the BSE is very small compared to other bourses in the Middle East.
The governor also said that the Central Bank reduced interest rates at the beginning of this year and would continue the same level of interest throughout 2015.
“Despite this drop, the Lebanese pound remained stable and the demand for financial instruments issued by the government or the Central Bank remained good,” Salameh said.
He added that the fall in the prices of oil and commodities would help to sustain high liquidity in the market.
Other speakers focused on the impact of the recent uprisings on the economies of the region over the past four years.
“With the outbreak of the so-called Arab Spring, many Arab states are now witnessing wars which have fragmented the Middle East and affected the economies of these states,” Joseph Torbey, the president of the World Union of Arab Bankers said.
He added that Lebanon was naturally affected by these wars.
“The GDP growth in Lebanon fell by less than 2 percent over the past four years. Trade with Arab countries also receives a big setback due to the spillover of the Syrian war,” Torbey said.
He called for long-term strategies to revitalize the Lebanese economy and achieve better growth.
But Torbey stressed that despite this gloomy picture, the Lebanese banking sector remained solid and has lifted the economy. Torbey underlined that Lebanese banks have not only financed the private sector but the public sector as well.
The President of the Association of Banks in Lebanon Francois Bassil underlined the importance of partnership between the private and public sectors in a bid to revive the economy and to help finance infrastructure projects in the country.
“A big part of these infrastructure projects requires massive investments which the state is unable to provide due to the mounting budget deficits and growing public debt. The best course for this issue is to allow the private sector to finance, build and operate these utilities,” Bassil said.
He also urged the authorities to implement reforms and fill all the vacancies in key government departments with qualified people.
“Filling these vacant positions should be done under certain criteria and away from nepotism, favoritism and political intervention,” Bassil said.
The head of the economic committees and former minister Adnan Kassar warned the Lebanese economy had not achieved the desired growth. “It is true that Lebanon is still better off than the surrounding states, but nevertheless the GDP growth hardly reached 2 percent, which is 75 percent less than the average economy can achieve under normal conditions,” he added.
Kassar argued that if it wasn’t for the drop of oil prices in the international markets, the debt-to-GDP ratio would have been higher than the current 129 and 133 percent levels.
He repeated the calls of other business leaders for the drafting of a comprehensive economic policy.