Grace under fire

The Central Bank (BDL) has coped with great professionalism and efficiency with the resulting monetary and financial crisis, sparked by the Hariri assassination. Not only has it kept a low profile and worked diligently towards supporting the Lebanese pound, but it has also provided significant liquidity in support of local banks, while its significant foreign currency reserves of almost $14 billion, amassed up to combat such liquidity scares have allowed the Lebanese pound/US dollar exchange to remain unchanged since 14/2 and the subsequent panic that gripped Lebanese and foreign depositors at Lebanese-domiciled banks. BDL has also recently put in place a mechanism that improves the Lebanese pound liquidity of commercial banks, and prevents deposit or capital flight for the banking system. Such a structure implies the sale by the commercial banks of their Lebanese pound three-year Treasury bills to the BDL in exchange for Lebanese pound liquidity. With this liquidity