The governor has come under scrutiny for a financial engineering scheme that resulted in windfall profits for many banks.
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Salameh's critics allege that the financial engineering has unlawfully allowed commercial banks to make enormous and unparalleled profits, as well as beef up the Central Bank's foreign currency reserves, while others insist that the governor was compelled to take this measure in light of the political vacuum, a drop in deposit growth and a fall in the Central Bank's foreign currency reserves at that time.Economist Ghazi Wazni stressed that if the economic and financial situation in Lebanon were normal, then replacing Salameh would be quite natural.The governor gave the banks $4.9 billion in profits and the market another $550 million from this swap, and this caused excess liquidity in Lebanese pound [that] the country could not handle," the expert argued.He suggested that some of the Lebanese banks have oversubscribed the $3 billion in Eurobonds which was issued by the Finance Ministry in a show of confidence for Salameh's monetary and financial policies.Lebanese banks snapped up 80 percent of the $3 billion issuance and the rest was grabbed by foreign investors and banks.Salameh had no choice but to do that," Mehanna said.He indicated that Salameh prevented banks from investing in derivatives and this spared the country from an inevitable financial crisis.
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